Ordinance LVII of 1962 · 108 pages
PDF viewer not loading? Download the PDF directly or view on Pakistan Code.
THE BANKING COMPANIES ORDINANCE, 1962
CONTENTS
PART I
PRELIMINARY
1. Short title, extent and commencement
2. Application of other laws not barred
3. Limited application of Ordinance to Coorperative Banks. [Omitted]
3A. Limited application of Ordianace to certain financial institutions
4. Power to suspend operation of Ordinance
5. Definitions
6. Ordinance to override memorandum, articles, etc
PART II
BUSINESS OF BANKING COMAPNIES
7. Form of business in which banking companies may engage
8. Use of the word “Bank” or any of its derivatives
9. Prohibition of trading
10. Disposal of non-banking assets
11. Prohibition of employment of managing agents and restrictions on certain forms of
employment
12. Restrictions on removal of records and documents
13. Requirement as to minimum paid-up capital and reserves
14. Regulation of paid-up capital, subscribed capital and authorized capital and voting rights
of share-holders
Page 1 of 108
15. Election of new directors
15A Appointment of director by the State Bank
15B. [Omitted.]
15C. Fitness and propriety
16. Restriction on commission, brokerage, discount, etc. on sale of shares
17. Prohibition of charge on unpaid capital
18. Prohibition of floating charge on assets
19. Restrictions as to payment of dividend
20. Prohibition of common directors
21. Reserve Fund
22. Cash Reserve
23. Restriction on the nature of subsidiary companies
24. Restrictions on loans and advances
25. Power of State Bank to control advances by banking companies
25A. Power of the State Bank to collect and furnish credit information
25AA. [Omitted.]
25B. Recovery of certain dues of banking companies as arrears of land revenue
26. Power of State Bank to prohibit acceptance of deposits by banking companies
incorporated outside Pakistan
26A. Deposits
27. Licensing of banking companies
27A. Prohibition of advertising for deposits and collection
27B. Disruptive union activities
28. Restrictions on opening of new, and transfer of existing places of business
29. Maintenance of liquid assets
30. Assets in Pakistan
31. Unclaimed deposits and articles of value
Page 2 of 108
32. Half-yearly returns and power to call for other returns and information
33. Power to publish information
33A. Fidelity and secrecy
33B. Guidelines by the State Bank
34. Accounts and balance sheet
35. Audit
36. Submission of returns
37. Copies of Balance Sheets and Accounts to be sent to Registrar
38. Display of audited balance sheet by banking companies incorporated outside Pakistan
39. Accounting provisions of this Ordinance not retrospective
PART-IIA
Islamic Banking
39A. Scope and application
39B. Definitions
39C. Business
39D Relationship between an Islamic banking institution or Islamic financial institution and its
customers
39E Shariah Governance
39F. Priority of payments to Islamic deposit account holders, investment account holders and
other claimants
39G. Charity
39H. Separate Regulatory Instructions
39I. Conversion and Establishment of Islamic Banking Subsidiary
39J. Penalities
39K. Other provisions relating to Islamic banking
39L. Savings
PART-IIB
Supervision
40. Inspection
Page 3 of 108
40A. Responsibility of State Bank
41. Power of the State Bank to give directions
41A. Power of the State Bank to remove directors or other managerial persons from office
41B. Power of the State Bank to supersede Board of Directors of a banking company
41C. Limitations
41D. Prosecution of directors, chief executives or other officers
42. Intervention triggers and powers of the State Bank
PART-IIC
Resolution of Banking Companies
42A. Resolution authority
42B. Resolution objectives
42C. Resolution planning
42D. Resolution triggers
42E. Resolution powers
42F. Order of meratorium
42G. Powers of State Bank to prepare scheme of reconstruction or amalgamation
42H. Bridge bank
42I. Temporary Public Funding for Resolution
43. Certain provisions of the Ordinance not to apply to certain banking companies.
PART II-D
TRANSACTION OF BANKING BUSNIESS ILLEGALLY BY COMPANIES, ETC.
43A. Power to call for certain information, etc
43AA. Special provisions
43B. Power to make declaration
43.C Consequences of a declaration under section 43B
43D. Deposit of cash and preservation of assets, etc.
43E. Statement of assets and liabilities to be submitted to State Bank
43F. Consequential provisions for winding up, etc.
Page 4 of 108
PART III
SUSPENSION OF BUSINESS AND WINDING UP OF BANKING COMPANIES
44. High Court defined
45. Restriction on stay order
46. Restriction on compromise or arrangement between banking companies and creditors
47. [Omitted.]
48. Procedure for amalgamation of banking companies
49. Winding up by High Court
50. Court Liquidator
51. State Bank to be official liquidator
52. Application of Companies Act to liquidators
53. Stay of proceedings
54. Preliminary report by official liquidator
55. Notice to preferential claimants and secured and unsecured creditors
56. Power to dispense with meetings of creditors, etc.
57. Booked depositors’ credits to be deemed proved
58. Priority payments to depositors
59. Restriction on voluntary winding up
PART IV
SPECIAL PROVISIONS FOR SPEEDY DISPOSAL OF WINDING UP PROCESSING
60. Part IV to override other laws
61. Power of High Court to decide all claims in respect of banking companies
62. Transfer of pending proceedings
63. Settlement of list of debtors
64. Special provisions to make calls on contributories
65. Documents of banking company to be evidence
66. Public examination of directors and auditors
67. Special provisions for assessing damages against delinquent directors, etc.
Page 5 of 108
68. Duty of directors and officers of banking company to assist in the realization of property
69. Special provisions for punishing offences in relation to banking companies being wound
up
70. Public examination of directors and auditors etc., in respect of a banking company under
scheme of arrangement
71. Special provisions for banking companies working under schemes of arrangement at the
commencement of the Ordinance
72. Appeals
73. Special period of limitation
74. State Bank to tender advice in winding up proceedings
75. Power to inspect
76. Power to call for returns and information
77. District Magistrate to assist official liquidator in taking charge of property of banking
company being wound up
78. Enforcement of orders and decisions of High Court
79. Power of High Court to make rules
80. References to directors, etc., shall be construed as including references to past directors,
etc.
81. Part II not to apply to banking companies being wound up
82. Validation of certain proceedings
PART IV-A
BANKING MOHTASIB
82A. Appointment of Mohtasib
82B. Terms and conditions of the Banking Mohtasib
82C. Reference to Banking Mohtasib by Court
82D. Procedure for making complaints
82E. Recommendations for implementation
82F. Power to call for information
82G. Report of Banking Mohtasib
Page 6 of 108
PART V
MISCELLANEOUS
83. Penalties
83A. Dishonest removal of pledged goods
84. Cognizance of offences, etc.
85. Application of fines
86. Special provisions for private banking companies
87. Restriction on acceptance of deposits withdrawable by cheques
88. Change of name by a banking company
89. Alteration of memorandum of a banking company
90. Certain claims for compensation barred
91. Application of certain provisions to banking company incorporated by special enactments
of the Federal Legislature
91A. Application of other laws barred
91B. Removal of difficulties
92. Power of Federal Government to make rules
93. Power to exempt in certain cases
93A. Exemption of officers, etc. from liability
93B. Exemption from requirement of licence
93C. Exchange of information
93CA. Co-operation with other authorities
93D. Continuance of charge and priority
94. Protection of action taken in good faith and indemnity
95. Repeals. [Omitted]
THE FIRST SCHEDULE[Omitted]
THE SECOUND SCHEDULE
THE THIRD SHEDULE
THE FOURTH SHEDULE
Page 7 of 108
THE BANKING COMPANIES ORDINANCE, 1962
1
ORDINANCE No. LVII OF 1962
[7th June, 1962]
An Ordinance to consolidate and amend the law relating to banking companies.
WHEREAS it is expedient to consolidate and amend the law relating to banking companies;
NOW, THEREFORE, in pursuance of the Proclamation of the seventh day of October, 1958, and
in exercise of all powers enabling him in that behalf, the President is pleased to make and promulgate
the following Ordinance :–
PART I
PRELIMINARY
1. Short title, extent and commencement.— (1) This Ordinance may be called the Banking
Companies Ordinance, 1962.
(2) It extends to the whole of Pakistan.
(3) It shall come into force at once.
2. Application of other laws not barred. The provisions of this Ordinance shall be in
addition to, and not, save as hereinafter expressly provided, in derogation of, the 2[Companies
Ordinance, 1984 (XLVII of 1984)], and any other law for the time being in force.
3. [Limited application of Ordinance to Cooperative Banks.] Omitted by the Establishment of
the Federal Banks for Cooperation and Regulation of Cooperative Banking Act, 1977 (IX of 1977)
s.48.w.e.f. 9-10-1976).
3
[3A. Limited application of Ordinance to certain function institutions:—
4
[(1) The provisions of sections 6, 13, 5[15C], 25, 25A, 5[*], 29, 31, 32, 33, 40, 41, 41A, 41B,
41C, 41D, 42, 5[42A, 42B, 42C, 42D, 42E, 42F, 42G, 42I] 51, 58, 83, 84 5[93C, 93CA,]
and 94 shall, with such modification as the State Bank may determine from time to time
in relation to activities which have implications for the monetary or credit policies of the
State Bank, apply to the Pakistan Industrial Credit and Investment Corporation, the
National Development Finance Corporation, the Bankers Equity Limited, the Pak-Libya
Holding Company Limited, the Saudi-Pak Industrial and Agricultural Investment
Company Limited, The Pak-Oman Investment Company (Pvt) Limited, The Pakistan
Kuwait Investment Company Limited and such other companies, corporations or
institutions or class of companies, corporations or institutions, as the Federal
Government 5[in consultation with the State Bank], for time to time, by notification in
the official Gazette, specify in the behalf.]
1
The Ordinance and the rules, notification and orders made thereunder, as in force in N.W.F.P. before the 15th July, 1975, have been
applied to the Districts of Chitral, Dir, Swat and Malakand Protected Areas of the N.W.F.P. by Regulation No. III of 1975, s.2 and the
Sch.
The Ordinance and the rules, notifications and orders made thereunder, have been applied to the whole of the Federally Administered
Tribal Areas or to the parts of those Areas to which they do not already apply, by Regulation No. I of 1975, s.2 and the Sch.
2
Sub. by Finance Act, 2007 (Act No. IV of 2007), s.4, (w.e.f. 01-07-2007).
3
Subs. by Act No. XIV of 1997, s. 2.
4
Subs by Ord. CXI of 2002, s. 2.
5
Ins., omitted and subs. by Act No. XXIX of 2024, s.2.
Page 8 of 108
(2) All notifications issued by the Federal Government which are inconsistent with the
provisions of sub-section (1) including such notification in respect of the National Development
leasing Corporations, Leasing Companies and Modaraba Companies shall stand rescinded with
immediate effect.]
1
[(1A) The provisions of sections 41C, 42, 42A, 42B, 42C, 42D, 42E, 42F, 42G, 42H,
42I, Part III, 93C and 93CA shall, with such modification as the State Bank may determine from
time to time to achieve objectives mentioned in the said sections, apply to the microfinance
banks licensed under the Microfinance Institutions Ordinance, 2001 (LV of 2001) and shall have
effect notwithstanding anything to the contrary contained in the Microfinance Institutions
Ordinance, 2001 (LV of 2001).]
4. Power to suspend operation of Ordinance.— (1) The 2[Federal Government], if on a
representation made by the State Bank in this behalf is satisfied that it is expedient so to do, may
by notification in the Official Gazette suspend for such period, not exceeding sixty days, as may
be specified in the notification, the operation of all or any of the provisions of this Ordinance,
either generally or in relation to any specified banking company.
(2) The 2[Federal Government] may, by notification in the official Gazette, extend from
time to time, the period of any suspension under sub-section (1) for such period or periods, not
exceeding sixty days at any one time, as it thinks fit so however that the total period does not
exceed one year.
(3) A copy of any notification issued under this section shall be laid on the table of the
3
[Central] Legislature—
(i) if it is in session, within three days of the issue of the notification; and
(ii) if it is not in session, as soon as it meets after the issue of the notification.
5. Definitions.— In this Ordinance, unless there is anything repugnant in the subject or
context,—
1
[(a) “approved securities” means the securities in which a trustee may invest
money under the applicable trust laws, and for the purpose of__
(i) sub-section (2) of section 13, includes such other securities as the
Federal Government may, by notification in the official Gazette,
declare to be approved securities for the purpose of that sub-
section; and
(ii) sub-section (1) of section 29, includes__
(a) such types of Pakistan rupee obligations of the State Bank
as it may specify from time to time; and
1
Ins. and Subs. by Act No. XXIX of 2024, s.2.
2
Subs. by the Banking Companies (Amdt.) Act, 1972 (30 of 1972), s.23 (w.e.f. 13-10-1972), for “Central Government”.
3
Subs. by F.A.O 1975 (P.O. No. 04 of 1975).
Page 9 of 108
(b) such types of Pakistan rupee obligations of the Federal
Government or a Provincial Government or of a
corporation wholly owned or controlled, directly or
indirectly, by the Federal Government or a Provincial
Government and guaranteed by the Federal Government as
the Federal Government may, by notification in the official
Gazette, declare to the extent determined from time to time
to be approved securities for the purpose of that sub-
section;]
(b) “banking” means the accepting, for the purpose of lending or investment,
of deposits of money from the public, repayable on demand or otherwise,
and withdrawable by cheque, draft, order or otherwise;
(c) “banking company” means any company which transacts the business of
banking in Pakistan 1[and includes their branches and subsidiaries
functioning outside Pakistan of banking companies incorporated in
Pakistan];
Explanation.— Any company which is engaged in the manufacture
of goods or carries on any trade and which accepts deposits of money from
the public merely for the purpose of financing its business as such
manufacturer or trader shall not be deemed to transact the business of
banking within the meaning of this clause
2
[(ca) “banking company under Resolution” means a banking company in
respect of which the State Bank has made an order under section 42D and
until such time that the State Bank by an order declares that the banking
company concerned is no longer under Resolution or until a winding-up
order is made under this Ordinance;]
(d) “branch” or “branch office”, in relation to a banking company, means any
branch or branch office, whether called a pay office or sub-pay office or
by any other name, at which deposits are received, cheques cashed or
moneys lent, and for the purposes of section 40 includes any place of
business where any other form of business referred to in sub-section (1) of
section 7 is transacted;
2
[(da) “bridge bank” means an entity established under section 42H to temporarily
take over and maintain some or all of the assets and liabilities of a banking
company as part of the Resolution process;]
3
[(dd) “creditor” includes persons from whom deposits have been received on the
basis of participation in profit and loss and a banking company or financial
institution from which financial accommodation or facility has been
received on the basis of participation in profit and loss, mark-up in price,
hire-purchase, lease, or otherwise;]
1
Ins. by Finance Act, 2007 (Act No. IV of 2007), s.4, (w.e.f. 01-07-2007).
2
Ins. by Act No. XXIX of 2024, s.3.
3
Cl. (dd) ins.by the Banking Companies (Third Amdt.) Ordinance, 1980 (58 of 1980),s.2.
Page 10 of 108
(e) “company” means any company which may be wound up under the
1
[Companies Ordinance, 1984 (XLVII of 1984)] 1[and includes a branch of
a foreign banking company doing banking business in Pakistan under a
licence issued by the State Bank in this behalf;]
2
[(ee) “debtor” includes a person to whom, or a banking company or financial
institution to which, finance as defined in the Banking Tribunals Ordinance
1984, has been provided;]
(f) “demand liabilities” means liabilities which must be met on demand, and
“time liabilities” means liabilities which are not demand liabilities;
3
[(fa) “Executive Committee” means an Executive Committee established under
section 9F of of the State Bank of Pakistan Act, 1956 (XXXIII of 1956);]
4
[(ff) “family members” in relation to a person means his spouse, dependent
lineal ascendants and descendants and dependent brothers and sisters;]
5
[(ffa) “foreign banking company” means a banking company, not incorporated
in Pakistan, which has a branch or branches doing banking business in
Pakistan under a licence issued by State Bank in this behalf;]
(g) “gold” includes gold in the form of coin, whether legal tender or not, or in
the form of bullion or ingot, whether refined or not;
2
[(gg) “loans, advances, and credit” includes “finance” as defined in the
Banking Tribunals Ordinance, 1984;]
(h) “managing director”, in relation to a banking company, means a director
who, by virtue of an agreement with the banking company or of a
resolution passed by the banking company in general meeting or by its
Board of Directors or, by virtue of its memorandum or articles of
association, is entrusted with the management of the whole, or
substantially the whole of the affairs of the company, and includes a
director occupying the position of a managing director, by whatever name
called;
3
[(ha) “Minister-in-charge” means the Federal Minister, to whom business
of this Act stands allocated;]
(i) “prescribed” means prescribed by rules made under this Ordinance;
1
(j) “private company” has the same meaning as in the [Companies
Ordinance, 1984 (XLVII of 1984)];
1
Subs. by Finance Act, 2007 (Act No. IV of 2007), s.4, (w.e.f. 01-07-2007).
2
Subs. by the Banking and Financial Services (Amendment of Laws) Ordinance, 1984 (57 of 1984),s.2 and Sch., for cl. (ee), which was
previously ins. by Ord. 58 of 1980,s.2.
3
Ins. by Act No.XXIX of 2024, s.3.
4
Cl. (ff) ins. by the Banking Companies (Amdt.) Act, 1972 (30 of 1972), s.3 (w.e.f. 13-10-1972).
5
Subs. by the Banking and Financial Services (Amdt.) of Law Ordinance 1984 (57 of 1984),s.2 and Sch., for cl. (gg), which was previously ins,
by Ordinance 58 of 1980, s.2.
Page 11 of 108
1
(k) “registrar” has the same meaning as in the [Companies Ordinance,
1984 (XLVII of 1984)];
2
[(ka) “Resolution” refers to the process of exercising one or more of the Resolution
powers as provided in section 42E with a view to achieve the Resolution
objectives including by ensuring the continuity of a banking company’s
critical functions, as specified by the State Bank;]
(l) “scheduled bank” has the same meaning as in the State Bank of Pakistan Act,
1956 (XXXIII of 1956);
(m) “secured loan or advance” means a loan or advance made on the security of
assets the market value of which is not at any time less than the amount of
such loan or advance, and “unsecured loan or advance” means a loan or
advance not so secured, or that part of it which is not so secured;
3
[(mm) “securities” includes securities as defined in the Capital Issues Continuance of
Control) Act, 1947 (XXIX of 1947);]
2
[(mma) “sponsor shares” means five percent or more paid-up shares of a banking
company, held or beneficially owned by a person individually or in concert
with his family members, group companies, subsidiaries and associates;]
(n) “State Bank” means the State Bank of Pakistan 4[;]
5
[(o) “substantial interest” in an undertaking shall be deemed to be possessed by a
person if he or any of his family members is the owner, director or officer of
or has control over the undertaking or if he or any of his family members
holds shares carrying not less than twenty per cent of the voting power in such
undertaking;
Explanation.— For the purpose of this clause,—
(i) “control” , in relation to an undertaking, means the power to exercise a
controlling influence over the management or the policies of the undertaking,
and, in relation to shares, means the power to exercise a controlling influence
over the voting power attached to such shares;
(ii) “person” includes a Hindu undivided family, a firm, an association or
body of individuals, whether incorporated or not, a company and every other
juridical person; and
(iii) “undertaking” means any concern, institution, establishment or enterprise
engaged in the production, supply or distribution of goods, or in the provision
or control of any services relating to the provision of board, lodging,
transport, entertainment or amusement, or of facilities in connection with the
supply of electrical or other energy, or to the purveying of news,
insurance or investment.].
1
Subs. by Finance Act, 2007 (Act No. IV of 2007), s.4, (w.e.f. 01-07-2007).
2
Ins. by Act No.XXIX of 2024, s.3.
3
Cl. (mm) ins. by the Banking companies (Third Amdt,) Ordinance 1980 (58 of 1980) s.2.
4
Subs. by the Banking Company (Amdt.) Act, 1972 (30 of 1972),s.3 (w.e.f. 13-10-1972).
5
Cl. (o) added by ibid.
Page 12 of 108
6. Ordinance to override memorandum, articles, etc.— Save as otherwise expressly
provided in this Ordinance,―
(a) the provisions of this Ordinance shall have effect notwithstanding anything
to the contrary contained in the memorandum or articles of a banking
company, or in any agreement executed by it, or in any resolution passed by
the banking company in general meeting or by its Board of Directors, whether
the same be registered, executed or passed, as the case may be, before or after
the commencement of this Ordinance; and
(b) any provision contained in the memorandum, articles, agreement or
resolution aforesaid shall, to the extent to which it is repugnant to the
provisions of this Ordinance, become or be void, as the case may be.
_______
PART II
BUSINESS OF BANKING COMPANIES
7. Forms of business in which banking companies may engage.—(1) In addition to the
business of banking, a banking company may engage in any one or more of the following forms of
business, namely:―
(a) The borrowing, raising, or taking up of money; the lending or advancing of
money either upon or without security; the drawing, making, accepting,
discounting, buying, selling, collecting and dealing in bills of exchange,
hundies, promissory notes, coupons, drafts, bills of lading, railway receipts,
warrants, debentures, certificates, scrips 1[participation term certificates, term
finance certificates, musharika certificates, modaraba certificates and such
other instruments as may be approved by the State Bank] and other
instruments, and securities whether transferable or negotiable or not; the
granting and issuing of letters of credit, traveler’s cheques and circular notes;
the buying, selling and dealing in bullion and species; the buying and selling
of foreign exchange including foreign bank notes; the acquiring, holding,
issuing on commission, underwriting and dealing in stock, funds, shares
debentures, debenture stock, bonds, obligations, securities 1[participation term
certificates, term finance certificates, musharika certificates, modaraba
certificates and such other instruments as may be approved by the State Bank]
and investments of all kinds; the purchasing and selling of bonds, scrips or
other forms of securities 1[participation terms certificates, term finance
certificates, musharika certificates, modaraba certificates and such other
instruments as may be approved by the State Banks] on behalf of constituents
or others, the negotiating of loans and advances; the receiving of all kinds of
bonds, scrips or valuables on deposit or for safe custody or otherwise; the
providing of safe deposit vaults: the collecting and transmitting of money and
securities;
1
[(aa) the providing of finance as defined in the Banking Tribunals Ordinance,
1984].
(b) acting agents for any Government or local authority or any other person or
1
Inserted vide the Banking and Financial services (Amendment of Laws) Ordinance 1984 (Ordinance No. LVII of 1984), s. 2 and sch.,
Page 13 of 108
persons; the carrying on of agency business of any description including the
clearing and forwarding of goods, giving of receipts and discharges and
otherwise acting as an attorney on behalf of customers, but excluding the
business of a managing agent or treasurer of a company;
1
[(bb) acting as “modaraba company” under the provision of the Modaraba
Companies and Modaraba (Floatation and Control) Ordinance, 1980 (XXXI
of 1980);]
(c) contracting for public and private loans and negotiating and issuing the same;
(d) the effecting, insuring, guaranteeing, underwriting, participating in managing
and carrying out of any issue, public or private, Government, municipal or
other loans or of shares, stock, debentures, 2[debenture stock or other
securities] of any company, corporation or association and the lending of
money for the purpose of any such issue;
(e) carrying on and transacting every kind of guarantee and indemnity business;
3
[(ee) purchase or acquisition in the normal course of its banking business of any
property, including commodities, patents, designs, trade-marks and
copyrights, with or without buy-back arrangements by the seller, or for sale in
the form of hire-purchase or on deferred payment basis with mark-up or for
leasing or licensing or for rent-sharing or for any other mode of financing;]
(f) managing, selling and realising any property which may come into the
possession of the company in satisfaction or part satisfaction of any of its
claims;
(g) acquiring and holding and generally dealing with any property or any right,
title or interest in any such property which may form security or part of the
security for any loans or advances or which may be connected with any such
security;
(h) undertaking and executing trust;
(i) undertaking the administration of estates as executor, trustee or otherwise;
(j) establishing and supporting or aiding in the establishment and support of
associations, institutions, funds, trusts and conveniences calculated to benefit
employees or ex-employees of the company or the dependents or connections
of such persons; granting pensions and allowances and making payments
towards insurance; subscribing to or guaranteeing moneys for charitable or
benevolent objects or for any exhibition or for any public, general or useful
object;
(k) the acquisition, construction, maintenance and alteration of any building or
works necessary or convenient for the purpose of the company;
1
New Clause (bb) inserted vide the Banking Companies (Third Amendment) Ordinance, 1980 (LVIII of 1980), s. 3
2
Substituted ibid. for the words “or debenture stock”.
3
Subs. by the Banking and Financial Services (Amdt. of Law) Ordinance 1984 (57 of 1984),s. 2 and Sch., for cl. (ee), which was previously ins.
by Ordinance No. 58 of 1980, s. 3.
Page 14 of 108
(l) selling, improving, managing, developing, exchanging, leasing,
mortgaging, disposing of or turning into account or otherwise dealing with
all or any part of the property and rights of the company;
(m) acquiring and undertaking the whole or any part of the business of any
person or company, when such business is of a nature enumerated or
described in this sub-section;
(n) doing all such other things as are incidental or conducive to the promotion
or advancement of the business of the company;
(o) any other form of business which the 1[State Bank by circular], specify as
a form of business in which it is lawful for a banking company to engage.
(2) No banking company shall engage in any form of business other than those referred
to in sub-section (1).
8. Use of the word “Bank” or any of its derivatives. 2[Every company] carrying on the
business of banking in Pakistan shall use the word “bank”, or any of its derivatives as part of its
name and no company other than a banking company shall use in its name any word calculated to
indicate that it is a banking company:
Provided that nothing in this section shall apply to
(a) subsidiary of a banking company formed for one or more of the purposes
mentioned in sub-section (1) of Section 23 whose name indicates that it is
a subsidiary of that banking company; and
(b) any association of banks formed for the protection of their mutual
interests and registered under section 3[42 of the Companies Ordinance
1984 (XLVII of 1984)] 4[:]
5
[Provided further that the 3[State Bank] may, subject to such conditions, if any, as it may
deem fit, by notification in the Official Gazette, authorise a company 6[***] not being a banking
company, to use in its name the word “bank” or any of its derivatives.]
7
[9. Prohibition of trading.—Except as authorised under section 7, no banking company
shall directly or indirectly deal in the buying or selling or bartering of goods or engage in any
trade or buy, sell or barter goods for others, otherwise than in connection with bills of exchange
received for collection or negotiation.
Explanation.― For the purpose of this section, “goods” means every kind of movable
property, other than actionable claims, stocks, shares, money, bullion and specie, and all
instruments referred to in clause (a) of sub-section (1) of Section 7.]
1
Subs. by Finance Act, 2007 (Act No. IV of 2007), s.4, (w.e.f. 01-07-2007).
2
Subs. by the Federal Laws (Revision and Declaration) Ordinance, 1981 (27 of 1981), s. 3 and Sch. II, for certain words.
3
Subs. by Act XIV of 1997, s. 3.
4
Subs. by the Banking Companies (Amdt.) Act, 1975 (65 of 1975), s.2 (w.e.f. 29-8-1975), for full-stop.
5
Added ibid.
6
The words “wholly or partly owned or controlled by it or by the State Bank: omitted by the Finance Act, 1990 (7 of 1990), s. 4A which was
previously amended by Ord. 35 of 1979, s. 2
7
Subs. by the Banking Companies (Third Amdt.) Ordinance, 1980 (58 of 1980), s. 4, for section 9.
Page 15 of 108
10. Disposal of non-banking assets.—Notwithstanding anything contained in section 7,
no banking company shall 1[except as may be permitted by the State Bank from time to time, or
as is required by it for its own use, hold any immovable property howsoever acquired,] for any
period exceeding seven years from the acquisition thereof or from the commencement of this
Ordinance, whichever is later or any extension of such period as in this section provided, and
such property shall be disposed of within such period or extended period, as the case may be:
Provided that the banking company may, within the period of seven years as aforesaid,
deal or trade in any such property for the purpose of facilitating the disposal thereof:
Provided further that the State Bank may in any particular case extend the aforesaid
period of seven years by such period not exceeding five years where it is satisfied that such
extension would be in the interests of the depositors of the banking company.
Explanation.—For the purpose of this section property, a substantial portion of which is
in use by banking company for its own genuine requirements shall be deemed to be property for
its own use.
11. Prohibition of employment of managing agents and restrictions on certain forms
of employment.—(1) No banking company—
(a) shall employ or be managed by a managing agent; or
(b) shall employ or continue the employment of any person—
(i) who is, or at any time has been, adjudicated insolvent, or has
suspended payment, or has compounded with his creditors, or
who is, or has been, convicted by a criminal court of an offence
involving moral turpitude; or
(ii) whose remuneration or part of whose remuneration takes the form
of commission of a share in the profits of the company:
Provided that nothing contained in sub-clause (ii) shall
apply to the payment by a banking company of—
(a) any bonus in pursuance of a settlement or award arrived at
or made under any law relating to industrial disputes or in
accordance with any scheme framed by such banking
company or in accordance with the usual practice prevailing
in banking business; or
(b) any commission to any broker (including guarantee broker),
cashier-contractor, clearing and forwarding agent,
auctioneer or any other person, employed by the banking
company under a contract otherwise than as a regular
member of the staff of the company; or
1
Subs. by the Banking and Financial Services (Amendment of Laws) Ordinance, 1984 (57 of 1984), s. 2 and sch., for certain words.
Page 16 of 108
(c) shall be managed by any person—
(i) who is a director of any other company not being a subsidiary
company of the banking company or a company registered under
section 26 of the 1[Companies Ordinance, 1984 (XLVII of 1984)],
except with the previous approval of the State Bank; or
(ii) who is engaged in any other business or vocation; or
(iii) who has a contract with the company for its management for a
period exceeding five years at any one time:
Provide that any contract with the company for its
management may be renewed or extended for a further period not
exceeding five years at a time if and so often as the directors so
decide:
Provided further that nothing in this clause shall apply to a
director, other than the managing director, of a banking company
by reason only of his being such director.
(2) Where a person holding the office of a chairman of director or manager or chief
executive officer (by whatever name called) of a banking company is, or has been found by any
tribunal or other authority (other than a criminal court) to have contravened the provision of any
law and the State Bank is satisfied that the contravention is of such a nature that the association
of such person with the banking company is or will be detrimental to the interests of the banking
company or its depositors or otherwise undesirable, the State Bank may make an order that that
person shall cease to hold the office with effect from such date as may be specified therein and
thereupon, that office shall, with effect from the said date, become vacant.
(3) Any order made under sub-section (2) in respect of any person may also provide that
he shall not, without the pervious permission of the State Bank in writing, in any way, directly or
indirectly, be concerned with, or take part in the management of, the banking company or any
other banking company for such period not exceeding five years as may be specified in the order.
(4) No order under sub-section (2) shall be made in respect of any person unless he has
been given an opportunity of making a representation to the State Bank against the proposed
order:
Provided that it shall not be necessary to give any such opportunity if, in the opinion of
the State Bank, any delay would be detrimental to the interests of the banking company or its
depositors.
(5) Any decision or order of the State Bank made under this section shall be final for all
purposes.
12. Restrictions on removal of records and documents.— No banking company shall
remove from Pakistan to a place outside Pakistan, any of its records and documents relating to its
business at its branches, whether they are functioning or not, without the prior permission in
writing of the State Bank.
______________________________________________________________________________
1
Subs. by Finance Act, 2007 (Act No. IV of 2007), s.4, (w.e.f. 01-07-2007).
Page 17 of 108
Explanation.— In this section the term “records” means ledgers, day books, cash books,
accounts books and all other books used in the business of a banking company and the term
“documents” means vouchers, cheques, bills, pay orders, securities for advances and any other
documents supporting entries in the books of, or claims by or against, a banking company.
1
[13. Requirement as to minimum paid-up capital and reserves.—(1)Subject to sub-
section (2) no banking company shall—
(a) commence business unless it has a minimum paid-up capital as may be
determined by the State Bank; or
(b) carry on business unless the aggregate of its capital and unencumbered
general reserves is of such minimum value within such period as may be
determined and notified by the State Bank from time to time for banking
companies in general or for a banking company in particular.
(2) No banking company incorporated outside Pakistan shall be deemed to have
complied with the provisions of sub-section (1) unless it deposits, and keeps deposits, with the
State Bank an amount by transfer of funds from outside Pakistan or in the form of assets acquired
out of remittable profits made by it from deposits in Pakistan which is not less than what is
required to be maintained under sub-section (1), in any one or more of the following forms,
namely:—
(i) interest-free deposit in cash in Pakistan rupees;
(ii) interest-free deposit in a freely convertible approved foreign exchange
within the meaning of the State Bank of Pakistan Act, 1956 (XXXIII of
1956), specified by the State Bank in respect of such banking company;
and
(iii) deposit of un-encumbered approved securities.
(3) Without prejudice to the provisions of section 83, the Sate Bank may, by order in
writing, require any banking company which has failed to comply with the provisions of clause
(b) of sub-section (1) within the period determined and notified under that clause to deposit with
the State Bank such amount not exceeding the amount by which the aggregate value of the
capital and unencumbered general reserves of such banking company falls short of the minimum
amount of the aggregate of the capital and unencumbered general reserves required to be
maintained by such banking company pursuant to clause (b) of sub-section (1) on such terms and
conditions as the State Bank may determine and every banking company which is so required
shall be bound to comply with the order.
(4) Any amount deposited and kept deposited with the State Bank under sub-section (2)
by any banking company incorporated outside Pakistan shall, in the event of the company
ceasing for any reason to carry on banking business in Pakistan, be an asset of the banking
company on which the claims of all the creditors of the banking company in Pakistan shall be the
first charge.
1
Subs. by Ord. 48 of 2000, s. 4.
Page 18 of 108
(5) If any dispute arises in computing the aggregate value of the capital and
unencumbered general reserves of any banking company, a determination thereof by the State
Bank shall be final.
Explanation.―For the purposes of this section, (a) the expression “ value” means the real
or exchangeable value or, if the real or exchangeable value exceeds the nominal value, the
nominal value; and (b) the expression “capital and unencumbered general reserves” means paid-
up capital and such other items as may be notified in this regard by the State Bank from time to
time.]
14. Regulation of paid-up capital, subscribed capital and authorized capital and
voting rights of share-holders.— (1) No banking company incorporated in Pakistan shall carry
on business in Pakistan unless it satisfies the following conditions, namely:―
(i) that the subscribed capital of the company is not less than one half of the
authorized capital and the paid-up capital is not less than one half of the
subscribed capital and that if the capital is increased it complies with the
conditions prescribed in this clause within such period not exceeding two
years as the State Bank may allow;
(ii) that the capital of the company consists of ordinary shares 1[and perpetual
non-cumulative preference shares] only 2[which may be of different kinds
and classes as provided by its memorandum and articles];
2
(iii) [* * * * * * *]
(iv) that the voting rights of any one shareholder, except those of the 3[Federal
Government] or a Provincial Government 2[or such shareholder who has
been permitted by the State Bank] do not exceed five per cent of the total
voting rights of all the shareholders.
(2) Notwithstanding anything contained in any law for the time being in force or in
any contract or instrument no suit or other proceeding shall be maintained against any person
registered as the holder of a share in a banking company on the ground that the title to the said
share vests in a person other than the registered holder:
Provided that nothing contained in this sub-section shall bar a suit or other proceeding—
(a) by a transferee of the share on the ground that he has obtained from the
registered holder a transfer of the share in accordance with any law
relating to such transfer; or
(b) on behalf of a minor or a lunatic on the ground that the registered holder
holds the share on behalf of the minor or lunatic.
(3) Every chairman, managing director or chief executive officer by whatever name
called of a banking company shall furnish to the State Bank through that banking company
returns containing full particulars of the extent and value of his holding of shares, whether
directly or indirectly, in the banking company and of any change in the extent of such holding or
any variation in the rights attaching thereto and such other information relating to those shares as
1
Ins. by Finance Act, 2007 (Act No. IV of 2007), s.4, (w.e.f. 01-07-2007).
2
Ins. and omitted by Act No. XXIX of 2024, s.4.
3
Subs. by Act 30 of 1972, s.23.
Page 19 of 108
the State Bank may, by order, require and in such form and at such time as may be specified in the
order.
1 2
[ [(4) The State Bank, if satisfied, may require any banking company by an order in writing
stating reasons to increase its paid up capital or enhance the level of regulatory capital, as deemed
appropriate, by such extent and within such period as may be specified in the order and the State
Bank shall exercise the power reasonably, fairly and justly.]
2
[(4A) Any person holding sponsor shares in a banking company shall deposit all such shares
in an account opened in a central depository in the manner specified by the State Bank and shall not
sell, transfer or encumber the shares in any manner whatsoever without prior written approval of the
State Bank.]
(5) Notwithstanding any provision contained in any other law for the time being in force,—
(a) if the State Bank has determined that a person is holding or is a beneficial
owner of five percent or more shares of a banking company without prior
approval of the State Bank or a person that acquired shareholding with prior
approval of the State Bank subsequently fails to meet the fit and proper test as
the State Bank may, by an order in writing stating reasons, require such
person to reduce, divest or transfer to a fit and proper person, his shareholding
in the banking company within such reasonable period and in such manner as
may be specified in the order;
(b) where a person holding five percent or more shares of a banking company is
or is likely to be detrimental to the interest of the banking company or its
depositors, the State Bank may, by an order in writing stating reasons, require
such person to divest his shareholding to a fit and proper person. The State
Bank shall exercise the power reasonably, fairly and justly; and
(c) no order under clause (a) or clause (b) shall be made unless the person
concerned has been given reasonable opportunity of making a representation
to the State Bank against the proposed order;
If the State Bank is of opinion that any delay would be detrimental to
the public interest or the interest of the banking company or its depositors, the
State Bank may, at the time of giving the opportunity aforesaid or at any time
thereafter and pending the consideration of the representation aforesaid, if
any, may make an appropriate interim order, and conduct the proceedings in a
reasonably expeditious manner.
The interim order may include prohibition of―
(i) transfer of, or the carrying out of the agreement or
arrangement to transfer such shares;
(ii) the exercise of voting rights in respect of such shares;
(iii) the payment of cash or stock dividends in respect of such
shares; and
(iv) the issue of further shares to the concerned shareholder;
1
Added by Act VII of 2011, s. 2.
2
Subs. and ins. by Act No. XXIX of 2024, s.4.
Page 20 of 108
(d) where direction given under clause (a) or clause (b) is not complied with,
the State Bank may dispose of such shares either through stock exchange
or public auction. The sale proceeds of such shares, after deduction of any
expenses incurred by the State Bank, shall be paid to the respective
shareholders within a period of three months. If necessary, the State Bank
may require―
(i) issuance of duplicate shares in place of the original shares; and
(ii) the 1[relevant central depository] Company to make appropriate
changes in their records; and
(e) any person aggrieved by the decision of the State Bank under clauses (a),
(b) and (d), may prefer appeal to the 1[*] Central Board of Directors of the
State Bank but pending decision of the proceedings, the shareholder shall
not derive any benefit including dividends, right shares, voting rights, etc.
from his shareholding without express permission of the 1[*] Board 1[of
Directors of the State Bank].
1
[Explanation.__ The expression “beneficial ownership” shall
include the definition of “beneficial ownership of shareholders or officer
of a company” given in clause (7) of sub-section (1) of section 2 of the
Companies Act, 2017 (XIX of 2017).]]
15. Election of new directors.—(1) The State Bank may, by order, require any banking
company to call a general meeting of the shareholders of the company within such time, not less
than two months from the date of the order, as may be specified therein or within such further
time as the State Bank may allow in this behalf, to elect in accordance with the voting rights
permissible under this Ordinance fresh directors, and the banking company shall be bound to
comply with the order.
(2) Every director elected under sub-section (1) shall hold office until the date up to
which his predecessor would have held office, if the election had not been held.
(3) Any election duly held under this section shall not be called in question in any court.
2
[15A. Appointment of director by the State Bank.— Notwithstanding anything
contained in the 3[Companies Ordinance, 1984 (XLVII of 1984)], or in the memorandum or
articles of association of any banking company, the State Bank may appoint not more than one
person to be a director of a banking company, whether or not he holds any qualification shares.]
15B. 1[* * * * * * *]
1[15C. Fitness and propriety.__ (1) Every person holding sponsor shares in a banking
company, director, managing director or chief executive officer, by whatever name called, and
such other officer of a banking company, as may be specified by the State Bank, shall be required
to meet the fit and proper test specified by the State Bank from time to time.
1
Subs., omitted and Ins. by Act No. XXIX of 2024, ss.4-6.
2
Sections 15A, 15B and 15C inserted by the Banking Companies (Amendment) Act, 1972 (Act No. XXX of 1972), s. 5 (w.e.f. 13-10-1972).
3
Subs. by Finance Act, 2007 (Act No. IV of 2007), s.4, (w.e.f. 01-07-2007).
Page 21 of 108
(2) Every person to whom the fit and proper test applies and the banking company
concerned shall furnish to the State Bank all information and any change in the information
furnished earlier, in such form and manner as may be required by the State Bank.
(3) If the State Bank determines that a person holding the office of directors, managing
director or chief executive officer, by whatever name called, or any other officer of a banking
company to whom the fit and proper test applies, subsequently fails to meet any terms or
conditions of the test, the State Bank may, without prejudice to any other power conferred on it
under this Ordinance, issue warning, or withdraw the fit and proper clearance of such person by
an order in writing stating the reasons thereof and such person shall vacate the office held from
the effective date of such an order:
Provided that the State Bank has given an opportunity of hearing, if sought by the
person, to make representations or file objections in respect of the State Bank’s decision
regarding their fit and proper test application:
Provided further that no order for withdrawal of fit and proper clearance shall be made
under this sub-section unless the concerned person has been given a reasonable opportunity of
making a representation to the State Bank against the said order, and if the State Bank is of the
opinion that any delay would be detrimental to the public interest or the interest of the banking
company or its depositors, the State Bank may, at the time of giving the opportunity aforesaid or
at any time thereafter and pending the consideration of the representation aforesaid, if any, make
an appropriate interim order. The aggrieved person shall have the right to appeal to the Beard of
Directors of the State Bank whose decision shall be final.]
16. Restriction on commission, brokerage, discount, etc. on sale of shares.
Notwithstanding anything to the contrary in sections 105 and 105A of the 1[Companies
Ordinance, 1984 (XLVII of 1984)], no banking company shall pay out directly or indirectly by
way of commission, brokerage, discount or remuneration in any form in respect of any shares
issued by it, any amount exceeding in the aggregate two and one-half per cent of the paid-up
value of the said shares.
17. Prohibition of charge on unpaid capital. No banking company shall create any
charge upon any unpaid capital of the company and any such charge, if created, shall be invalid.
18. Prohibition of floating charge on assets.—(1) Notwithstanding anything contained
in section 7 no banking company shall create a floating charge on the undertaking or any
property of the company or any part thereof, unless the creation of such floating charge is
certified in writing by the State Bank as not being detrimental to the interest of the depositors of
such company.
(2) Any such charge created without obtaining the certificate of the State Bank shall be
invalid.
(3) Any banking company aggrieved by the refusal of a certificate under sub-section (1)
may, within ninety days from the date on which such refusal is communicated to it, appeal to the
2
[Federal Government].
(4) The decision of the 2[Federal Government] where an appeal has been preferred to it
under sub-section (3) or of the State Bank where no such appeal has been preferred shall be final.
1
Subs. by Finance Act, 2007 (Act No. IV of 2007), s.4, (w.e.f. 01-07-2007).
2
Subs. by Act 30 of 1972, s.23. for “Centeral Government”.
Page 22 of 108
19. Restrictions as to payment of dividend.—(1) No banking company shall pay any
dividend on its shares until all its capitalised expenses (including preliminary expenses,
organisation expenses, share-selling commission, brokerage, amounts of losses incurred and any
other item of expenditure not represented by tangible assets) have been completely written off.
(2) Notwithstanding anything to the contrary contained in sub-section (1) or in the
1
[Companies Ordinance, 1984 (XLVII of 1984)], a banking company may pay dividends on its
shares without writing off—
(i) the depreciation, if any, in the value of its investment in approved
securities in any case where such depreciation has not actually been
capitalised or otherwise accounted for as a loss;
(ii) the depreciation, if any, in the value of its investments in shares,
debentures or bonds (other than approved securities) in any case where
adequate provision for such depreciation has been made to the satisfaction
of the auditor of the banking company;
(iii) the bad debts, if any, in any case where adequate provision for such debts
has been made to the satisfaction of the auditor of the banking company.
1
[(3) Notwithstanding anything in sub-section (1) or in the Companies Ordinance, 1984
(XLVII of 1984), if a banking company meets the minimum capital requirement and capital
adequacy ratio as specified by State Bank from time to time, and has also accounted for the
portion of capitalized expenses, goodwill, etc., for the year to the satisfaction of the auditor of the
banking company, it shall also be eligible for payment of dividend out of profits of the banking
company for the said year.]
2
[(4) If the State Bank is satisfied that conditions are not favourable for such payment, or
the financial position of a banking company so warrants, it may, by order in writing stating
reasons, restrict or prohibit any banking company from paying dividends to its shareholders for
such period as may be specified in the order and the State Bank shall exercise the power
reasonably, fairly and justly.
(5) No order shall be made unless the banking company concerned has been given an
opportunity of making a representation to the State Bank and where the State Bank is of the
opinion that any delay would be detrimental to the public interest or the interest of the banking
company or its depositors, the State Bank may, at the time of giving the opportunity aforesaid or
at any time thereafter and pending the consideration of the representation aforesaid, if any, make
an appropriate interim order.]
20. Prohibition of common directors.—(1) Except with the permission of the State
Bank, no banking company incorporated in Pakistan shall have as a director any person who is a
director—
(i) of any other banking company; or
1
Subs., and added by Finance Act, 2007 (Act No. IV of 2007), s.4, (w.e.f. 01-07-2007).
2
Sub-sections 4 & 5 added vide Banking Companies (Amendment) Act , 2011 (Act No. VII of 2011).
Page 23 of 108
(ii) of companies which among themselves are entitled to exercise voting
rights in excess of twenty per cent of the total voting rights of all the
shareholders of the banking company.
1
[(IA) No banking company incorporated in Pakistan shall have as a director any
person who is—
2
[(a) a Federal Minister, a Minister of State or a Provincial Minister; or]
(b) a person in the service of Pakistan who is not appointed or nominated by
Government as a director by virtue of his office.]
(2) If immediately before the commencement of this Ordinance any person holding
office as a director of a banking company is also a director of companies which among
themselves are entitled to exercise voting rights in excess of twenty per cent of the total voting
rights of all the shareholders of the banking company he shall, within such period from such
commencement as the State Bank may specify in this behalf—
(a) either resign his office as a director of the banking company; or
(b) choose such number of companies as among themselves are not entitled to
exercise voting rights in excess of twenty per cent of the total voting rights
of all the shareholders of the banking company as companies in which he
wishes to continue to hold the office of a director and resign his office as a
director in the other companies.
21. Reserve Fund.— 3[(1) Every banking company incorporated in Pakistan shall create
a reserve fund to which shall be credited—
(a) if the amount in such fund together with the amount in the share premium
account is less than the paid-up capital of the banking company, a sum
equivalent to not less than twenty per cent of the balance of profit of each
year as disclosed in the profit and loss account prepared under section 34
and before any dividend is declared; and
(b) if the amount in such fund together with the amount in the share premium
account is equal to or exceeds the paid-up capital of the banking company,
a sum equivalent to not less than ten per cent of the balance of profit
disclosed as aforesaid and before any dividend is declared.]
(2) Where a banking company appropriates any sum or sums from the reserve fund or the
share premium account, it shall, within twenty-one days from the date of such appropriation,
report the fact to the State Bank explaining the circumstances relating to such appropriation:
Provided that the State Bank may, in any particular case, extend the said period of
twenty-one days by such period as it thinks fit or condone any delay in the making of such report.
1
New sub-section (IA) inserted vide Banking Companies (Amendment) Act, 1972 (Act No. XXX of 1972).
2
Subs. by F.A.O., 1975, Art. 2 & Sch. (w.e.f. 01-08-1975), for cl. (a).
3
Subs. by Act 30 of 1972, s. 7, for sub-section (1).
Page 24 of 108
22. Cash Reserve.— Every banking company, not being a scheduled bank, shall maintain by
way of cash reserve in cash with itself, or in current account opened with the State Bank or its agent
or partly in cash with itself and partly in such account or accounts a sum equivalent to at least two per
cent of its time liabilities in Pakistan and five per cent of its demand liabilities in Pakistan and shall
submit to the State Bank before the fifteenth day of every month a return showing the amount so held
on 1[Thursday] of each week of the preceding month with particulars of its time and demand
liabilities in Pakistan on each such 1[Thursday] or if any such 1[Thursday] is a public holiday under
the Negotiable Instruments Act, 1881 (XXVI of 1881), at the close of business on the preceding
working day.
2
[* * * * * * *]
23. Restriction on the nature of subsidiary companies.—(1) A banking company shall not
form any subsidiary company except a subsidiary company formed 3[with the prior written approval
of the State Bank] for one or more of the following purposes, namely:—
(a) the undertaking and executing of trusts,
4
[(aa) the carrying on of banking business strictly in conformity with the Injunctions
of Islam as laid down in the Holy Quran and Sunnah;]
(b) the undertaking of the administration of estates as executor, trustee or
otherwise,
5
[(bb) the carrying on of business of modaraba under the provisions of the Modaraba
Companies and Modaraba (Floatation and Control) Ordinance 1980 (XXXI of
1980).]
(c) the providing of safe deposit vaults;
3
[(Ca) the carrying on of business as a microfinance bank under the provisions of the
Microfinance Institutions Ordinance, 2001 (LV of 2001);]
3
(d) [* * *] the carrying on of the business of banking exclusively outside
Pakistan; 6[*]
7
[(dd) the conduct of any from of business permitted by section 7; 3[*]]
3
[(ddd) for carrying on business, exclusively for development Causes, as may be
approved by the State Bank; or]
(e) such other purposes as are incidental to the business of banking.
(2) Save as provided in sub-section (1), no banking company shall hold shares in any
company whether as pledgee, mortgagee or absolute owner, of an amount exceeding thirty percent of
the paid-up share capital of that company or thirty per cent of its own paid-up share capital and
reserves, whichever is less:
Provided that any banking company which is on the date of commencement of this Ordinance
holding any shares in contravention of the provisions of this sub-section shall not be liable to any
1
Subs. and shall be deemed to have been so subs. by the Banking Companies (amdt.) Ordinance, 1978 (3 of 1978), s. 3, for “Friday” (w.e.f. 1-7-
1977).
2
Explanation omitted by the Banking Companies (Amdt) Ordinance, 1984 (34 of 1984), s. 3.
3
Ins. and omitted by Act No. XXIX of 2024, s.7.
4
Ins. by Ord. CXI of 2002, s. 4.
5
New clause (bb) inserted vide. The Banking Companies (Third Amendment) Ordinance, 1980 (Ord. LVIII of 1980), s.5.
6
The word “or” omitted vide Banking and Financial Services (Amendment in Laws) Ordinance, 1984 (Ordinance No. LVII of 1984), s.2 and Sch.
7
New cl. (dd) ins. ibid.
Page 25 of 108
penalty therefore if it reports the matter without delay, to the State Bank and if it brings its holding of
shares into conformity with the said provision within such period, not exceeding two years, as the
State Bank may think fit to allow.
(3) Save as provided in sub-section (1) and notwithstanding anything contained in sub-
section (2), a banking company shall not, after the expiry of one year from the date of
commencement of this Ordinance hold shares, whether as pledgee, mortgagee or absolute owner,
in any company in the management of which any managing director or manager of the banking
company is in any manner concerned or interested.
1
[24. Restrictions on loans and advances.—(1) No banking company shall—
(a) make any loans or advances against the security of its own shares; or
(b) grant unsecured loans or advances to, or make loans and advances on the
guarantee of,—
(i) any of its directors;
(ii) any of the family members of any of its directors;
(iii) any firm or private company in which the banking company or any of the
persons referred to in sub-clause (i) or sub-clause (ii) is interested as
director, proprietor or partner; or
(iv) any public limited company in which the banking company or any of the
persons as aforesaid is substantially interested.
(2) No banking company shall make loans or advances to any of its directors or to
individuals, firms or companies in which it or any of its directors is interested as partner, director
or guarantor, as the case may be, without the approval of the majority of the directors of that
banking company, excluding the director concerned.]
2
[25. Power of State Bank to control advances by banking Companies.__ (1)
Whenever the State Bank is satisfied that it is necessary or expedient in the public interest so to
do, it may determine the policy in relation to advances to be followed by banking companies
generally or by any banking company in particular, and, when the policy has been so determined,
all banking companies or the banking company concerned, as the case may be, shall be bound to
follow the policy as so determined.
3
[(2) Without prejudice to the generality of the power conferred by sub-section (1), the
State Bank may give directions to banking companies either generally or to any banking
company or group of banking companies in particular,—
(a) as to the credit ceilings to be maintained, credit targets to be achieved for
different purposes, sectors and regions, the purposes for which advances
may or may not be made, the margins to be maintained in respect of
advances, the rates of interest, charges or mark-up to be applied on
advances and the maximum or minimum profit sharing ratios; and
1
Subs. by the Banking Companies (Amdt.) Act, 1972 (30 of 1972), s. 8 (w.e.f. 13-10-1972) for the original section 24.
2
Subs. by the Banking Companies (Amdt.) Ordinance, 1971 (7 of 1971), s. 2 (w.e.f. 15-03-1971) for the original section 25.
3
Subs. by the Banking Companies (Third Amdt.) Ordinance, 1980 (58 of 1980), s. 6 for sub-section (2), which was previously amended by Act
No. 30 of 1972, s. 9 (w.e.f. 13-10-1972), for certain words.
Page 26 of 108
(b) prohibiting the giving of loans, advances and credit to any borrower or
group of borrowers on the basis of interest, either for a specific purpose or
for any purpose whatsoever; and each banking company shall be bound to
comply with any direction so given.]
(3) If any default is made by a banking company in complying with the policy
determined under sub-section (1) or direction given under sub-section (2), every director and
other officer of the banking company and every other person who is knowingly a party to such
default shall, by order of the State Bank, be liable to a penalty of an amount 1[as specified in the
Fourth Schedule].
2
[(4) Without prejudice to the provisions of sub-section (3), the State Bank may, for the
purposes of securing implementation of any special credit schemes or monetary policy or
observance of credit ceilings by a banking company, by order in writing require banking
companies generally, or any banking company in particular, to make special deposits with it for
such amount and on such terms and conditions as may be laid down by the State Bank in this
behalf.]
(5) The amount deposited with the State Bank under sub-section (4) or any part thereof
may, at the discretion of the State Bank, be released by it to the banking company which
deposited it as and when the State Bank deems fit either unconditionally or on such terms and
subject to such conditions as the State Bank may by order in writing, determine from time to
time.
(6) Any penalty imposed under sub-section (3) shall be payable on demand made by the
State Bank and, in the event of refusal or failure by the director, officer or other person
concerned to pay on such demand, shall be recoverable as arrear of land revenue.]
3
[25A. Power of the State Bank to collect and furnish credit information.— (1)
Every banking company shall furnish to the State Bank credit information in such manner as the
State Bank may specify, and the State Bank may, either of its own motion or at the request of any
banking company, make such information available to any banking company on payment of such
fee as the State Bank may fix from time to time:
Provided that, while making such information available to a banking company, the State
Bank shall not disclose the names of the banking companies which supplied such information to
the State Bank:
Provided further that, a banking company which purposes to enter into any financial
arrangement which is in excess of the limit laid down in this behalf by the State Bank from time
to time shall, before entering into such financial arrangement, obtain credit information on the
borrower from the State Bank.
(2) Any credit information furnished by the State Bank to a banking company under sub-
section (1) shall be treated as confidential and shall not, except for the purposes of this section or
with the prior permission of the State Bank, be published or otherwise disclosed.
(3) No court, tribunal or other authority, including an officer of Government, shall require
the State Bank or any banking company to disclose any information furnished to, or supplied by, the
State Bank under this section.
1
Subs. by Act No. XXIX of 2024, s. 8.
2
Subs. by the Banking Companies (Amdt.) Act, 1972 (30 of 1972), s. 9 (w.e.f. 13-10-1972), for sub-section (4).
3
Ss. 25A and 25B ins. by the Banking Companies (Amdt.) Act, 1972 (30 of 1972), s. 10 (w.e.f. 13-10-1972).
Page 27 of 108
Explanation.— For the purpose of this section, —
(a) “borrower” means any person to whom any credit limit has been sanctioned by
any banking company, whether availed of or not, and includes—
(i) in the case of a company or corporation, its subsidiaries;
(ii) in the case of a Hindu undivided family, any member thereof or any firm
in which such member is a partner;
(iii) in the case of a firm, any partner thereof or any other firm in which such
partner is a partner; and
(iv) in the case of an individual, any firm in which such individual is a
partner; and
(b) “credit information” means any information relating to—
(i) the amounts and the nature of loans or advances or other credit facilities,
including bills purchased or discounted, letters of credit and guarantees,
indemnities and other engagements extended by a banking company to
any borrower or class of borrowers;
(ii) the nature of security taken from any borrower for credit facilities
granted to him;
(iii) the guarantees, indemnities or other engagements furnished to a banking
company by any of its customers; and
(iv) operations or accounts in respect of loans, advances and other credit
facilities referred to in this clause.
1
25AA. [* * * * * * *]
25B. Recovery of certain dues of banking companies as arrears of land revenue. Loans and
advances made by a banking company for agricultural 2[and other] purposes shall be recoverable as an
arrear of land revenue as if the banking company were a local authority for the purposes of section 5 of
the Revenue Recovery Act, 1890 (I of 1890):
Provided that no sum shall be so recoverable unless the banking company has, by notice in
writing, informed the debtor, not less than fifteen days before proceeding to have it so recovered, that he
may repay by such instalment as may be fixed in the notice and that action to have the debt recovered as
an arrear of land revenue will be taken if he fails to pay any instalment on or before the due date.]
26. Power of 3[State Bank] to prohibit acceptance of deposits by banking companies
incorporated outside Pakistan. The 3[State Bank] may, by notification in the official Gazette, order that
any banking company or 3[any class of] banking companies incorporated outside Pakistan shall from a
date to be specified in the notification—
(1) discontinue to accept any interest bearing deposits or accept such deposits only upon such
terms and under such conditions as may be specified in the notification:
Provided that no such notification shall be made earlier than three years after the commencement
of this Ordinance and the date specified in the notification shall not be earlier than six months after the
date of the notification; or
1
Omitted by Act No. XXIX of 2024, s.9.
2
Ins. by Act XIV of 1997, s. 5.
3
Subs. by Act XIV of 1997, s. 6.
Page 28 of 108
(2) discontinue to accept any deposits or accept deposits only upon such terms and under
such conditions as may be specified in the notification:
Provided that no such notification shall be made earlier than three years after the
commencement of this Ordinance and the date specified in the notification shall not be earlier
than one year from the date of the notification.
1
[26A. Deposits.—(1) Deposits of money may be accepted by a banking company on the
following basis:―
(i) on participation in profit and loss of the banking company;
(ii) free of interest or return in any form, and
(iii) until such time as the Federal Government determines and notifies, by
publication in the official Gazette, that the domestic operations of the
banking companies have become free of interest, on interest.
(2) Every banking company receiving deposits on the basis of participation in profit and
loss shall maintain separate account in respect thereof as also of investments made, finances
provided out of the amount of such deposits, cash reserves and liquid assets maintained there
against and all income and expenditure relating thereto.
(3) Deposits received on the basis of participation in profit and loss shall be invested or
employed, at the absolute discretion of the banking company, only in transactions or business the
return on which does not accrue to the banking company by way of interest.
(4) A person depositing money with a banking company on the basis of participation in
profit and loss shall be entitled, subject to such general directions as the State Bank may give
from time to time in the interest of monetary stability, to receive periodically such share of the
profit of the banking company arising out of such transactions as may be determined by it and, in
the event of loss incurred by the banking company, shall be liable to bear proportionate loss.]
2
[(5) Where the State Bank has determined that a banking company,—
(a) is carrying on its business in a manner detrimental to the interest of its
depositors; or
(b) is materially unable to discharge its financial obligations or continue its
operations; or
(c) has failed to meet 3[specified] capital requirements or cash and liquidity
requirements or provisioning requirements or any condition specified in
the license or any preventive or remedial measure 3[specified] by the State
Bank,
1
New section 26A ins. by the Banking Companies (Third Amdt.) Ordinance, 1980 (58 of 1980), s. 7.
2
Added by Act No. VII of 2011, s. 4.
3
Subs. by Act No. XXIX of 2024, s.10.
Page 29 of 108
the State Bank, by an order in writing stating reasons, may impose conditions or restrictions on
the banking company on accepting deposits from any class of depositors or type of deposits for
such period as may be specified in the order and the State Bank shall exercise the power
reasonably, fairly and justly.
(6) No order shall be made unless the banking company concerned has been given an
opportunity of making a representation to the State Bank and if the State Bank is of the opinion
that any delay would be detrimental to the public interest or the interest of the banking company
or its depositors, the State Bank may, at the time of giving the opportunity aforesaid or at any
time thereafter and pending the consideration of the representation aforesaid, if any, may make
an appropriate interim order.]
27. Licensing of banking companies.— 1[(1) No individual or association or body of
individuals, not being a company, shall carry on banking business in Pakistan and, save as
hereinafter provided, no company shall carry on banking business in Pakistan unless it holds a
licence issued in that behalf by the State Bank; and any such licence may be issued subject to
such conditions as the State Bank may think fit to impose.]
(2) Every banking company in existence on the commencement of this Ordinance, before
the expiry of six months from such commencement, and every other company before
commencing banking business in Pakistan, shall apply in writing to the State Bank for a licence
under this section:
Provided that nothing in sub-section (1) shall be deemed to prohibit a banking company
in existence on the commencement of this Ordinance from carrying on banking business until it
is granted a licence in pursuance of this section or is by notice in writing informed by the State
Bank that a licence cannot be granted to it:
Provided further that the State Bank shall not give a notice as aforesaid to a banking
company in existence on the commencement of this Ordinance before the expiry of the period of
two years in the case of banking companies incorporated in Pakistan and of six months in the
case of banking companies incorporated outside Pakistan 2[* * *].
(3) Before granting any licence under this section, the State Bank may require to be
satisfied by an inspection of the books of the company or otherwise that all or any of the
following conditions are fulfilled, namely:—
(a) that the company is or will be in a position to pay its present or future
depositors in full as their claims accrue;
(b) that the affairs of the company are not being or are not likely to be
conducted in a manner detrimental to the interests of its present or future
depositors;
(c) that, in the case of a company incorporated outside Pakistan, the
Government or law of the country in which it is incorporated provides the
same facilities to banking companies registered in Pakistan as the
______________________________________________________________________________
1
Subs. by the Banking Companies (Amdt.) Ordinance, 1979 (56 of 1979), s. 2 for sub-section (1).
2
Omitted by Ord. 48 of 2000, s. 5.
Page 30 of 108
Government or law of Pakistan grants to banking companies incorporated
outside Pakistan and that the company complies with all the provisions of
this Ordinance applicable to banking companies incorporated outside
Pakistan.
(4) The State Bank may cancel a licence granted to a banking company under this
section,—
(i) if the company ceases to carry on banking business in Pakistan; or
(ii) if the company at any time fails to comply with any of the conditions
imposed upon it under sub-section (1); or
(iii) if at any time, any of the conditions referred to in sub-section (3) ceases to
be fulfilled 1[; or]
1
[(iv) if the banking company is engaged in or is being used for criminal
activities; or
(v) if the banking company has destroyed or concealed, or moved outside of
Pakistan all or part of its assets, the administration, operation and books or
records without the explicit approval of the State Bank; or
(vi) if the banking company has created material hindrance, delay or
obstruction for the State Bank in performance of its supervisory
functions:]
1
[Provided that before cancelling a license,__
(i) under clause (ii) or clause (iii) of this sub-section on the ground
that the banking company has failed to comply with or has failed or
ceased to fulfil any of the conditions referred to therein; or
(ii) under clause (iv), clause (v) or clause (vi) of this sub-section,
the State Bank, unless it is of opinion that the delay will be prejudicial to the interest of the
company’s depositors or the public, shall provide an opportunity of being heard to the banking
company or, as the case may be, shall grant to the company on such terms as it may specify, an
opportunity of taking the necessary steps for complying with or fulfilling such condition.]
(5) Any banking company aggrieved by the decision of the State Bank cancelling a
licence under this section may, within thirty days from the date on which such decision is
communicated to it, 2[apply for review to the 1[*] Board of 1[Directors of] the State Bank].
2
[(6) The decision of the State Bank subject to the result of review under sub-section (5),
if any, shall be final.]
3
[27A. Prohibition of advertising for deposits and collection.— Notwithstanding
anything contained in any other law for the time being in force, no company, firm or person, not
1
Subs., ins. and omitted by Act No. XXIX of 2024, s.11.
2
Subs. by Act XIV of 1997, s. 7.
3
Subs. by the Finance Act, 1990 (7 of 1990), s. 4A, for section 27A, which was previously ins. by Act 6 of 1987, s. 6.
Page 31 of 108
being a banking company or a corporation or authority established by the Federal Government or
a company duly authorised in this behalf by the Controller of Capital Issues or the Corporate
Law Authority or the Registrar Cooperative Societies, shall solicit or invite deposits of money
from the public through advertisements in the public media or by postal circulars, handbills,
displays in public places or by any other means, or collect or receive any deposits of money in
pursuance thereof.
Explanation.—For the purposes of this section, “deposits of money” shall be deemed to
include money called, invited or collected for the purpose, or declared object, of investment or
borrowing in any business carried on, or proposed to be carried on, by the company, firm or
person by whom or on whose behalf, such money is called, invited, collected or received
irrespective of the nature of the relationship, arrangement or terms offered or provided by such
company, firm or person to the person making the investment, deposits of money or payment or
of the basis or understanding on which the money is so called, invited, collected or received.]
1
[27B. Disruptive union activities.— (1) No officer or member of a trade union in a
banking company shall use any bank facilities including a car or telephone to promote trade
union activities, or carry weapons into bank premises unless so authorized by the management,
or carry on trade union activities during office hours, or subject bank officials to physical
harassment or abuse and nor shall he be a person who is not an employee of the banking
company in question.
(2) Any person violating any of the provisions of sub-section (1) shall be guilty of an
offence punishable with imprisonment of either description which may extend to three years, or
with fine, or with both.]
28. Restrictions on opening of new, and transfer of existing, places of business.—(1)
No banking company shall open a new place of business in any part of Pakistan or change,
otherwise than within the same city, town or village the location of an existing place of business
situated in any part of Pakistan and no banking company incorporated in Pakistan shall open a
new place of business outside Pakistan or change, otherwise than within the same city, town or
village in any country or area outside Pakistan, the location of an existing place of business
situated in that country or area without first obtaining the prior permission in writing of the State
Bank.
(2) Nothing in this section shall apply to the opening for a period not exceeding one
month of a temporary place of business within a city, town or village or the environs thereof
within which the banking company already has a place of business, for the purpose of affording
banking facilities to the public on the occasion of an exhibition, a conference or a mela or any
other like occasion:
Provided intimation of such opening is given to the State Bank within one week of the
date of opening.
Explanation.—For the purpose of this section—
(a) “place of business” includes any sub-office, pay-office, sub-pay office and
any place of business at which deposits are received, cheques cashed or
moneys lent;
(b) “new place of business” includes a place of business which is reopened
after being temporarily closed.
1
Ins. by Act XIV of 1997, s.8.
Page 32 of 108
(3) The State Bank may, before giving the permission referred to in sub-section (1) of
this section to any banking company, require to be satisfied by an inspection under section 40 or
otherwise regarding such aspects of the company‘s affairs as the State Bank may deem
necessary.
29. Maintenance of liquid assets.—(1) Every banking company shall maintain in
Pakistan in cash, gold or unencumbered approved securities valued at a price not exceeding the
current market price, an amount which shall not at the close of business on any day be less than
twenty per cent of the total of its time and demand liabilities in Pakistan 1[:]
1
[Provided that the requirements of sub-section (1) as to the maintenance in Pakistan of
cash, gold or unencumbered approved securities may from time to time, by notification in the
official Gazette, be varied by the 2[Federal Government] 3[:]]
3
[Provided further that the State Bank may, from time to time, specify the types of assets
mentioned in this sub-section which shall not be eligible for the maintenance of liquid assets.]
Explanation.—For the purposes of this section, “unencumbered approved securities” of a
banking company shall include its approved securities lodged with another institution for an
advance or any other credit arrangement to the extent to which such securities have not been
drawn against or availed of.
(2) In computing the amount provided for in sub-section (1), any deposit required under
4
[sub-section (2)] of section 13 to be made with the State Bank by a banking company
incorporated outside Pakistan and any balances maintained in Pakistan by a banking company in
current account with the State Bank or its agent or both, 5[or in profit and loss sharing term
deposit account with the State Bank] including in the case of a scheduled bank the balance
required to be so maintained under sub-section (1) of section 36 of the State Bank of Pakistan
Act, 1956 (XXXIII of 1956), shall be deemed to be cash maintained.
(3) Every banking company shall, before the close of the month succeeding the month
to which the return relates, furnish to the State Bank a monthly return in the prescribed form and
manner showing particulars of the company’s assets maintained in accordance with this section
and its time and demand liabilities in Pakistan at the close of business on each 6[Thursday]
during the month, or if any 6[Thursday] is a public holiday under the Negotiable Instruments Act,
1881 (XXVI of 1881), at the close of business on the preceding working day.
7
[(4) The cash deposited by a banking company or financial institution under sub-section
(1) and by a scheduled bank under the State Bank of Pakistan Act, 1956 (XXXIII of 1956) shall
be deemed to be part of the assets of the banking company but shall not be subject to any
encumbrance, nor shall it be available for the discharge of any liability of the banking company
or financial institution other than the order of liquidation made by the High Court under this
Ordinance, nor shall the said cash deposit be available to attachments in execution of any decree
or recoverable under order of any authority under any law for the time being in force, except any
claim of the State Bank.]
1
Subs. and added by the Banking Companies (Amdt.) Act, 1965 (7 of 1965), s. 2 (w.e.f. 31-7-1965).
2
Subs. by the Banking Companies (Amdt.) Act, 1972 (30 of 1972), s. 23 (w.e.f. 13-10-1972), for “Central Government”.
3
Subs. and added by Act No. XXIX of 2024, s.12.
4
Subs. by Ord. 48 of 2000, s. 6.
5
Ins. by the Banking Companies (Third Amdt.) Ordinance, 1980 (58 of 1980), s. 8.
6
Subs. and shall be deemed to have been so, subs. by the Banking Companies (Amdt.) Ordinance, 1978 (3 of 1978), s. 3, (w.e.f. 1-7-1977), for
“Friday”.
7
Added by Act No. VII of 2011, s.5.
Page 33 of 108
30. Assets in Pakistan.—(1) At the close of business on any day the assets in Pakistan of
every banking company shall not be less in value than an amount representing such percentage of
its time and demand liabilities in Pakistan as may be 1[specified] by the State Bank from time to
time provided that the percentage so 1[specified] shall not exceed eighty five per cent.
(2) Every banking company shall, before the close of the month succeeding that to which
the return relates, furnish to the State Bank, in the prescribed form and manner a monthly return
showing particulars of the company’s assets maintained in accordance with this section and its
time and demand liabilities in Pakistan at the close of business on every 2[Thursday] or if any
2
[Thursday] is a public holiday under the Negotiable Instruments Act, 1881 (XXVI of 1881), at
the close of business, on the preceding working day.
(3) For the purposes of this section—
(a) “assets in Pakistan” shall be deemed to include export bills drawn in, and
import bills drawn on and payable in, Pakistan and expressed in such
currencies as the State Bank may from time to time approve in this behalf
and also such securities as the State Bank may approve in this behalf
notwithstanding that all or any of the said bills or securities are held
outside Pakistan, but shall exclude such assets as in the opinion of the
State Bank cannot properly be regarded as assets;
(b) “liabilities in Pakistan” shall not include the paid-up capital or the reserves
or any credit balance in the profit and loss account of the banking
company.
3
[31. Unclaimed deposits and articles of value.— (1) Where—
(a) a debt payable in Pakistan currency 4[or any other currency] is 1[owed] by
a banking company by reason of a deposit, not being a deposit in the name
of a minor or a Government or a court of law, at a branch of the banking
company 4* * in respect of which no transaction has taken place and no
statement of account has been requested or acknowledged by the creditor
during a period of 1[fifteen] years reckoned—
(i) in the case of a deposit made for a fixed period, from the day on
which the fixed period terminated, and
(ii) in the case of any other deposit, from the day on which the last
transaction took place or a statement of account was last requested
or acknowledged by the creditor, whichever is later; or
(b) a dividend, bonus, profit or other sum of money whatsoever which has
become due on a deposit and remained unpaid or unacknowledged by the
creditor for period of 1[fifteen] years reckoned from the date on which the
dividend, bonus, profit or other sum of money, as the case may be, became
due and payable; or
1
Subs. by Act No. XXIX of 2024, ss.13-14.
2
Subs. and shall be deemed to have been so, subs. by the Banking Companies (Amdt.) Ordinance, 1978 (3 of 1978), s. 3, (w.e.f. 1-7-1977), for
“Friday”.
3
Subs. by the Banking Companies (Amdt.) Act, 1972 (30 of 1972), s. 11 (w.e.f. 13-10-1972), for the original section 31.
4
Ins. & Omitted by Ord. CXI of 2002, s. 5.
Page 34 of 108
(c) a cheque, draft or bill of exchange including an instrument drawn by one
branch of the banking company upon another such branch payable in
Pakistan currency 1[or any other currency] has been issued, certified or
accepted by a banking company at a branch of the banking company 1[* *]
and no payment has been made in respect thereof for a period of 2[fifteen]
years from the date of issue, certification or acceptance; 2[*]
2
[the banking company shall give forthwith a three months’ notice in writing by registered post
acknowledgement due to the creditor or the beneficiary of the cheque, draft or bill of exchange
on his address last made known by him to the banking company, and if on the expiry of the three
months’ period no acknowledgement or reply is received from the addressee, the banking
company shall pay to the State Bank an amount equal to the amount, owing by the banking
company in respect of the debt or to the amount that would be owing if the instrument had been
presented for payment, including profit, if any, and payment accordingly shall discharge the
banking company from all liabilities in respect of the debt or instrument, as the case may be.]
(2) A notice required to be given 2[under] sub-section (1)—
(a) may, in the case of a firm or a Hindu undivided family, be addressed to
any member of the firm or the manager or any adult male member of the
family and, in the case of any other association of persons, to the principal
officer thereof;
(b) may be given to a duly authorised agent of the person to whom it is
required to be given or, where he has died, to his legal representative or
where he has been declared an insolvent, to his assignee, provided the
banking company has had notice of appointment of the agent or of the
death or insolvency of the person to whom it is required to be given;
(c) shall, in the case of joint creditor or more than one beneficiaries of a
cheque, draft or bill of exchange 2[* * *] be deemed to be sufficient notice
to all such persons if given to any one of them; and
(d) shall, notwithstanding the fact that it is miscarried or the addressee is dead
or insane or has become insolvent or the envelope 2[* *] is returned with
the postal endorsement “addressee is untraceable” or any other like
endorsement, be deemed to have been served on the fifteenth day
following the day on which the envelope 2[* *] in which it is contained is
posted, if it is properly addressed, prepaid and posted, provided the
banking company has had no notice of the death, insanity or insolvency of
the person to whom it is required to be given.
(3) A certificate in writing under the signature of an employee of the banking company
whose duty it is to address, prepay and post letters on behalf of the banking company to the effect
that the envelope 2[* *] containing a notice required to be given by sub-section (1) was
addressed, prepaid and posted shall be conclusive evidence of its having been so addressed,
prepaid and posted.
1
Ins. & Omitted by Ord. CXI of 2002, s. 5.
2
Subs. and omitted by Act No. XXIX of 2024, s.14.
Page 35 of 108
(4) As soon as an amount is paid by a banking company to the State Bank under sub-
section (1), it shall cease to bear interest 1[or rank for a share of profit or loss] notwithstanding
anything to the contrary contained in the terms of the debt or instrument or any law for the time
being in force.
(5) Where any banking company has paid an amount 2[* * *] to the State Bank under
sub-section (1), the banking company shall preserve and continue to preserve all signature cards
and signing authorities and other documents relating to the debt or instrument 2[* *], as the case
may be, until it is informed by the State Bank in writing that they need not be preserved any
longer.
(6) Nothing in the Limitation Act, 1908 (IX of 1908), or in any other law for the time
being in force shall affect the liability of a banking company toward the State Bank under sub-
section (1).
2
[(7) Every banking company shall, within thirty days after the close of each calendar
year, submit to the State Bank a return in the specified form and manner of all unclaimed
amounts remaining unpaid in the books of the banking company, after the expiry of fifteen years
as reckoned under sub-section (1).]
2
[(8) The State Bank shall place on its website a list of the amounts received by it under
sub-section (1) and not claimed by any person:
Provided that public attention shall be drawn towards the list of amounts so placed on the
website through public notices in not less than two newspapers and media channels once each
quarter.]
2
[(9) Any banking company which has paid any amount to the State Bank in accordance
with sub-section (1) may, within thirty days from the date of such payment, submit to the State
Bank its claim as regards lien, counter-claim or right of set-off in relation to the amount so paid.]
(10) Any person who claims to be entitled to any money 2[* *] paid 2[* *] to the State
Bank under sub-section (1) may submit his claim to the State Bank 2[through the concerned
banking company as per the procedure laid down by the State Bank from time to time shall be
added].
2
[(11) Subject to sub-sections (9), and (14), the State Bank may pass such order on a
claim submitted to it under sub-section (9) or sub-section (10) as it may deem fit after satisfying
itself as to the genuineness of the claim, and where the State Bank makes any payment to any
person submitting a claim under sub-section (10), a receipt given by him shall be a final
discharge to the State Bank.]
(12) 2[* * * * * * *]
2
[(13) Subject to sub-sections (9), and (14), any amount paid to the State Bank under
sub-section (1) shall remain in the custody of the State Bank.]
1
Ins. by the Banking Companies (Third Amdt.) Ordinance, 1980 (58 of 1980), s. 9.
2
Omitted, subs. and added by Act No. XXIX of 2024, s.14.
Page 36 of 108
1
[(14) Notwithstanding anything contained in sub-section (1) about the giving of a notice
by a banking company to any creditor or beneficiary of any cheque, draft or bill of exchange, or
in sub-section (8) about the placement by the State Bank of the list of unclaimed amounts, the
procedure to be followed and the manner of disposal of debts and instruments in a case where the
person concerned is not for the time being residing in Pakistan shall be such as may be
determined by the State Bank from time to time.]
(15) Any decision of the State Bank under sub-section (11) about the acceptance,
satisfaction or otherwise of the lien right of set-off or counter-claim of a banking company or, as
the case may be, the entitlement of any person to any money 1[* *] received by the State Bank
under sub-section (1) shall be final and shall not, except as provided in sub-section (16), be
called in question in any manner by or before any court, tribunal or other authority.
1
[(15A) Where any security, share, goods, currency or any other valuable article
(hereinafter collectively called article) lying in safe custody of or in a customer’s locker with a
banking company has been transferred to the vault of the banking company by reason of the
customer having failed to pay the rent or fee in accordance with the agreement between the
parties or otherwise in accordance with the instructions issued by the State Bank, details of such
articles shall be submitted to the State Bank in the manner as specified by the State Bank. The
banking company shall publish factum of the same on its website in the manner as specified by
the State Bank.
(15B) With the prior written permission of the State Bank, a banking company may
close suspended, blocked or frozen accounts of designated or proscribed individuals and/or
entities. In the event the State Bank authorizes such closure, the banking company shall
transfer the deposits, if any, to the credit of such suspended, blocked or frozen accounts to
the State Bank.]
(16) Any person aggrieved by a decision of the State Bank under sub-section (11) may,
within one month from the date of the decision, prefer an appeal to such officer of the State Bank
superior in rank to the officer by whom the decision appealed against was given as may be
authorised in this behalf by the Governor of the State Bank.
(17) For the purpose of adjudicating and determining any claim under sub-section (9) or
sub-section (10) or deciding any appeal under sub-section (16) the State Bank shall follow such
procedure as may be prescribed and shall have the same powers as are vested in a court under the
Code of Civil Procedure, 1908 (Act V of 1908), when trying a suit in respect of the following
matters, namely:—
(a) enforcing the attendance of any person and examining him on oath;
(b) compelling the production of documents and materials objects; and
(c) issuing commissions for the examination of witnesses.
(18) Any proceeding before the State Bank under this section shall be deemed to be a
“judicial proceeding” within the meaning of section 228 of the Pakistan Penal Code (Act XLV of
1860), and the State Bank shall, for the purposes of any such proceeding, be deemed to be a
“Civil Court” within the meaning of section 480 of the Code of Criminal Procedure, 1898(Act V
of 1898).
1
Subs., omitted and ins. by Act No. XXIX of 2024, s.14.
Page 37 of 108
(19) No court fee shall be payable for filing, exhibiting or recording any document in, or
obtaining any document form, the State Bank in any proceeding under this section.]
32. Half-yearly returns and power to call for other returns and information.—(1)
Every banking company shall, before the close of the month succeeding the half-year to which
the return relates submit to the State Bank a half-yearly return in the prescribed form and manner
showing its assets and liabilities in Pakistan as they stood at the close of business on the thirtieth
day of June in the first half and the thirty-first day of December, in the second half of the year.
(2) The State Bank may, at any time, by notice in writing, require banking companies
generally, or any banking company in particular to furnish it within the time specified therein or
such further time as the State Bank may allow, with any statement or information relating to the
business or affairs of such banking company or companies (including any business or affairs with
which such banking company or companies is or are concerned) and, without prejudice to the
generality of the foregoing power, may call for information, at such intervals as the State Bank
may deem necessary, regarding the investment of banking companies and the classification of
their advances in respect of industry, commerce and agriculture.
33. Power to publish information.— 1[(1)] The State Bank, if it considers it in the
public interest so to do, may publish any information obtained by it under this Ordinance in such
consolidated form as it thinks fit.
1
[(2) The State Bank may publish any information regarding its enforcement actions
including warning, penalty, order of removal, or any other action against a banking company or a
director, chief executive or any other officer of a banking company, if deemed necessary for the
interest of the banking company or its depositors, public interest or the prevention of the use of
the financial system for any illegal activity including money laundering or financing of
terrorism.]
2
[33A. Fidelity and secrecy.— (1) Subject to sub-section (4), every bank and financial
institution shall, except as otherwise required by law, observe the practices and usage customary
among bankers and, in particular, shall not divulge any information relating to the affairs of its
customers except in circumstances in which it is, in accordance with law, practice and usage
customary among bankers, necessary or appropriate for a bank to divulge such information.
(2) Every president, chairman, member of the Board, administrator, auditor, adviser,
officer or other employee of any bank and financial institution shall, before entering upon his
office, make a declaration of fidelity and secrecy in such form as may be prescribed.
(3) Notwithstanding anything contained in sub-section (1) and (2), every balance sheet
and profit and loss account statement prepared by a bank and financial institution shall include
statements prepared in such form and manner as the State Bank may specify in respect of written
off loans or any other financial relief of five hundred thousand rupees or above allowed to a
person as well as the provision, if any, made for bad or doubtful debts.
(4) The State Bank of Pakistan may, if satisfied that it is necessary so to do at the time of
holding general elections under any law relating thereto, publish a list of persons to whom any
loans, advances or credits were extended by a bank or financial institution, either in their own
names or in the names of their spouses or dependents or of their business concerns (if mainly
1
Renumbered and added by Act No. XXIX of 2024, s.15.
2
Ins. by Act No. XIV of 1997, s.9.
Page 38 of 108
owned and managed by them) which were due and payable and had not been paid back for more
than one year from the due date, or whose loans were unjustifiably written off in violation of
banking practices, rules or regulations on or after such date as may be determined by the
Government:
Provided that before publishing the name of any person in any such list he shall be given
prior notice and, if he so requests, an opportunity of hearing.
33B. Guidelines by the State Bank.—The State Bank may at any time either on the
request of any one or more banking companies or the Federal Government or sue motu, lay down
general guidelines for facilitating recovery of bad or doubtful loans, advances or finance by
giving incentives to borrowers or customers to make repayments within a specified time frame
by making adjustments or remissions in relation to interest or mark-up or part of the principal
amount in cases in which all full recovery is not possible by reason of inadequacy of security or
as part of a general scheme for the rehabilitation of sick units.]
34. Accounts and balance-sheet.—(1) At the expiration of each calendar year every
banking company incorporated in Pakistan, in respect of all business transacted by it, and every
banking company incorporated outside Pakistan, in respect of all business transacted through its
branches in Pakistan, shall prepare with reference to that year a balance sheet and profit and loss
account as on the last working day of the year in the forms set out in the Second Schedule or as
near thereto as circumstances admit.
(2) The balance sheet and profit and loss account shall be signed:—
(a) in the case of a banking company incorporated in Pakistan, by the manager
or the principal officer of the company and where there are more than
three directors of the company, by at least three of those directors, or
where there are not more than three directors, by all the directors, and
(b) in the case of a banking company incorporated outside Pakistan by the
manager or agent of the principal office of the company in Pakistan and by
another officer next in seniority to the manager or agent.
(3) Notwithstanding that the balance sheet of a banking company is under sub-section (1)
required to be prepared in a form other than 1[the Companies Act, 2017 (XIX of 2017)], the
requirements of that Act relating to the balance sheet and profit and loss account of a company
shall, in so far as they are not inconsistent with this Ordinance, apply to the balance-sheet or
profit and loss account, as the case may be, of a banking company.
2
[(4) The State Bank may, after giving not less than fifteen days notice 1[by posting on its
website] of its intention so to do, from time to time by a 1[circular], amend the forms set out in
the Second Schedule.]
3
[35. Audit.—(1) The balance sheet and profit and loss account prepared in accordance
with section 34 shall be audited by a person who is duly qualified, under the Chartered
Accountants Ordinance, 1961 (X of 1961), or any other law for the time being in force, to be an
auditor of companies and is borne on the panel of auditors maintained by the State Bank for the
purposes of audit of banking companies 4[.The State Bank shall classify the panel of auditors, so
maintained, in different categories for different banking companies keeping in view the scope
and size of such banking companies.]
1
Subs., and added by Act No. XXIX of 2024, s.16.
2
Subs. by the Banking Companies (Third Amdt.) Ordinance, 1980 (58 of 1980), s. 10, for sub-section (4).
3
Subs. by the Banking Companies (Amdt.) Act, 1972 (30 of 1972), s. 12 (w.e.f. 13-10-1972), for the original section 35.
4
Ins. by Finance Act, 2007 (Act No. IV of 2007), s.4, (w.e.f. 01-07-2007).
Page 39 of 108
(2) An auditor shall hold office for a period of three years and shall not be removed from
office before the expiry of that period except with the prior approval of the State Bank.
1
[(3) If the State Bank is not satisfied with the performance of the auditor of a banking
company or the auditor has not fulfilled any of the requirements laid down in this section the
State Bank after giving the auditor an opportunity of being heard, may
(a) revoke the appointment of external auditors of the banking company;
(b) downgrade the category of the auditor in the panel of the auditors; and
(c) remove the auditor from the panel of the auditors for a maximum period of
five years.
(4) The auditors shall report all the matters of material significance to State Bank and
reporting of such information and material shall not constitute breach of confidentiality under
any law for the time being in force.]
2
[(5)] The State Bank may, from time to time, lay down guidelines for the audit of
banking companies and the auditors shall be bound to follow those guidelines.
2
[(6)] Subject to the provisions of sub-section (3), the auditor shall have the powers of,
exercise the functions vested in, and discharge the duties and be subject to the liabilities and
penalties imposed on, auditors, of companies by section 145 of the Companies Act, 1913 (VII of
1913).
2
[(7)] In addition to the matters which, under the aforesaid Act and the guidelines laid
down by the State Bank under sub-section (3), the auditor is required to state in his report, he
shall also state—
(a) whether or not the information and explanations required by him have
been found to be satisfactory;
(b) whether or not the transactions of the banking company which have come
to his notice have been with in the powers of the banking company;
(c) whether or not the returns received from branch offices of the banking
company have been found adequate for the purposes of his audit;
(d) whether the profit and loss account shows a true balance of profit and loss
for the period covered by such account; and
(e) any other matter which he considers should be brought to the notice of the
shareholders of the banking company.]
3[36.
Submission of returns. The accounts and balance-sheet referred to in section 34
together with the auditor’s report as passed in the Annual General Meeting shall be published in
the manner specified by the State Bank, and three copies thereof shall be furnished as returns to
the State Bank within three months of the close of the period to which they relate:
1
Ins. by Finance Act, 2007 (Act No. IV of 2007), s.4, (w.e.f. 01-07-2007).
2
Re-numbered ibid.
3
Subs. by Act No. XXIX of 2024, s.17.
Page 40 of 108
Provided that the State Bank may in special circumstances either of its own motion or on
the application of a banking company, extend the said period of three months for the furnishing
of such returns by such further period as it deems appropriate, so however that the total period of
each extension shall not exceed one year.]
37. Copies of Balance Sheets and Accounts to be sent to Registrar. Where a banking
company in any year furnishes its balance-sheet and accounts in accordance with the provisions
of section 36 it may, or when it is a private company, shall, at the same time send to the registrar
three copies of such balance-sheet and accounts and of the auditor’s report, and where such
copies are so sent, it shall not be necessary for the company, to file copies of the balance sheet
and accounts with the registrar as required by sub-section (1) of section 134 of the 1[Companies
Ordinance, 1984 (XLVII of 1984)], and such copies so sent shall be chargeable with the same
fees and shall be dealt with in all respects as if they were filed in accordance with that section.
38. Display of audited balance sheet by banking companies incorporated outside
Pakistan. Every banking company incorporated outside Pakistan shall, not later than the first
Monday in August of any year in which it carries on business, display in a conspicuous place in
its principal office and in every branch office in Pakistan, a copy of its last audited balance sheet
and profit and loss account prepared under section 34 and shall keep it so displayed until
replaced by a copy of the subsequent balance sheet and profit and loss account so prepared and
every such banking company shall in addition display in like manner copies of its complete
audited balance sheet and profit and loss account relating to its banking business as soon as they
are available and shall keep the copies so displayed until copies of such subsequent accounts are
available.
39. Accounting provisions of this Ordinance not retrospective. Nothing in this
Ordinance shall apply to the preparation of accounts by a banking company and the audit and
submission thereof in respect of any accounting year which has expired prior to the
commencement of this Ordinance, and notwithstanding the other provision of this Ordinance
such accounts shall be prepared, audited and submitted in accordance with the law in force
immediately before the commencement of this Ordinance.
2[Part-IIA
Islamic Banking
39A. Scope and application.__ Save as expressly provided in this part, the provisions
hereof shall apply to all Islamic banking institutions as defined hereunder in clause (a) of section
39B and wherever applicable to Islamic financial institutions as defined in clause (h) of section
39B and shall have effect notwithstanding anything contained to the contrary in the Ordinance or
in any other law for the time being in force. All the provisions of this Ordinance except sub-
sections (1), (2), (3) and (4) of section 26A shall be applicable to Islamic banking institutions
unless repugnant to Shariah.
39B. Definitions.__ The terms defined herein would only be applicable for this part and
notwithstanding anything contained to the contrary in this Ordinance, the following defined
terms will have the meaning assigned to them under this part:__
(a) “Islamic banking institution” means:
1
Subs. by Finance Act, 2007 (Act No. IV of 2007), s.4, (w.e.f. 01-07-2007).
2
Ins. by Act No. XXIX of 2024, s.18.
Page 41 of 108
(i) a full-fledged Islamic banking company, where its entire business and
operations are in accordance wit the Principles of Shariah (as defined
herein below) and is licensed by the State Bank for this purpose;
(ii) an Islamic banking subsidiary of a banking company, where the entire
business and operations of this subsidiary are in accordance with the
Principles of Shariah and is licensed by the State Bank for this
purpose; or
(iii) dedicated Islamic banking branch or branches of a banking company,
where the entire business and operations of the branch or branches are
in accordance with the Principles of Shariah and is licensed by the
State Bank for this purpose.
(b) “Islamic Deposit Account” means an account in which a sum of money is
accepted by an Islamic banking institution as per related agreed terms and
conditions, consistent with applicable regulations of the State Bank;
(c) “Islamic Deposit Account Holder” means a person having Islamic deposit
account at an Islamic banking institution;
(d) “Investment Account” means an account in which a sum of money is accepted
by an Islamic banking institution in accordance with the Principles of Shariah
and shall be payable by the Islamic banking institution as per related agreed
terms and conditions. It includes following categories of accounts:
(i) “Unrestricted Investment Account” means an account in which a sum
of money is accepted in accordance with the Principles of Shariah on
a profit and loss sharing basis and which shall be managed or invested
at the absolute discretion of the Islamic banking institution in
accordance with the Principles of Shariah.
(ii) “Restricted Investment Account” means an account in which a sum of
money is accepted in accordance with the Principles of Shariah and
which shall be managed or invested on the basis of an agreement on a
specific investment mandate between the Islamic banking institution
and the investment account holder, in accordance with the Principles
of Shariah.
(e) “Investment Account Holder” means a person having an investment account
at an Islamic banking institution;
(f) “Ordinance” means Banking Companies Ordinance, 1962 (LVII of 1962);
(g) “Shariah” means the injunctions of Islam as laid down in the Holy Quran and
Sunnah;
(h) “Islamic financial institution” means the financial institutions covered in
section 3A and permitted by the State Bank to conduct their business and
operations in accordance with Principles of Shariah;
(i) “Principles of Shariah” mean the following principles governing Islamic
banking and finance:
(i) prohibition of all forms of Riba and Usury;
Page 42 of 108
(ii) prohibition of transactions featuring excessive uncertainty (Gharar) and
prohibition of gambling (Maysir and Qiniar);
(iii) adherence to all Shariah requirements related to specific relationships,
arrangements and transactions;
(iv) facilitation of a sustainable economic system, risk and reward sharing,
and social justice;
(v) avoidance of injustice, exploitation, hoarding, fraud, deception and
activities that are deemed harmful to society.
39C. Business.__ Islamic banking institutions shall undertake business and operations consistent
with the Principles of Shariah and these shall include:
(a) Accepting Islamic Deposit Accounts on modes, based on the Principles of
Shariah, as specified by the State Bank.
(b) Accepting Restricted and Unrestricted Investment Accounts on modes, based on
the Principles of Shariah, as specified by the State Bank.
(c) Doing such businesses as are prescribed in section 7 of this Ordinance subject to
conformity with the Principles of Shariah, as specified by the State Bank.
39D. Relationship between an Islamic banking institution or Islamic financial institution
and its customers.__ The relationship between an Islamic banking institution or Islamic financial
institution and its customers with regard to any transactions or arrangements that are in conformity with
the Principles of Shariah shall be determined in accordance with the contractual terms governing such
transactions or arrangements.
39E. Shariah Governance.__ (1) Shariah governance shall refer to the set of institutional and
organizational arrangements at an Islamic banking institution or Islamic financial institution through
which effective independent oversight of compliance with the Principles of Shariah over each of the
undertaken activities, structures and processes is ensured as per the State Bank’s regulations, directives,
instructions, notifications, circulars and guidelines.
(2) Ensuring an effective Shariah governance framework shall be one of the key responsibilities
of the Board of Directors of the Islamic banking institution or Islamic financial institution
(3) An Islamic banking institution or Islamic financial institution shall___
(a) Comply with all Shariah regulatory standards and requirements concerning their
operations as specified in the State Bank’s regulations, directives, instructions.
notifications, circulars and guidelines.
(b) Comply with any requirements related to Shariah governance framework as
specified in the State Bank’s regulations, directives, instructions, notifications,
circulars and guidelines.
(4) A banking company undertaking business and operations through dedicated Islamic banking
branches after getting a separate license shall have policies, internal systems, procedures, and controls as
per the State Bank’s regulations, directives, instractions, notifications, circulars and guidelines to ensure
that:__
(a) all the transactions, arrangements and dealings of the Islamic banking branches
are in accordance with the Principles of Shariah;
Page 43 of 108
(b) banking business and operations of dedicated branches are property
segregated; and
(c) the banking company provides adequate disclosures in this regard.
39F. Priority of payments to Islamic deposit account holders, investment account
holders and other claimants.__ In case of the liquidation of an Islamic banking institution or Islamic
financial institution, the State Bank shall prepare a scheme, consistent with the Principles of Shariah,
for making of payments to the Islamic deposit account holders, investment account holders and other
claimants.
39G. Charity.__ (1) Where the Islamic banking institution or Islamic financial institution, in
compliance with the State Bank’s regulations, directives, instructions, notifications, circulars and
guidelines on charity policy, determines that any portion of the income earned by an Islamic banking
institution or Islamic financial institution is not in conformity with the Principles of Shariah, and
where late payment by the customer is charged with a penalty, . Islamic banking institution or Islamic
financial institution shall credit such amounts as notified by the State Bank. into a charity fund. The
charity fund shall be maintained and utilized in such a manner as specified by the State Bank from
time to time.
(2) In cases where the State Bank has determined that any income earned by an Islamic
banking institution or Islamic financial institution is not in conformity with the Principles of Shariah,
it shall direct the institution concerned to credit such income into the charity fund as specified by the
State Bank.
39H. Separate Regulatory Instructions.__ The State Bank shall specify regulations,
directives, instructions, notifications, circulars and guidelines for Islamic banking institutions or
Islamic financial institutions, including but not limited to definitions of Islamic modes and concepts
of Islamic banking and finance, types of Islamic deposit accounts and investment accounts,
certificates of investment, profit & loss distribution and pool management, and any other area as may
be deemed necessary by it.
39I. Conversion and Establishment of Islamic Banking Subsidiary.__ (1) A banking
company may convert its one or more branches or entire business and operations into an Islamic
banking institution.
(2) A banking company shall establish an Islamic banking subsidiary or shall convert it into a
full-fledged Islamic bank if:
(a) its Islamic banking branches exceeds 50% of the number of the total
branches; or
(b) the share of its Islamic banking assets exceeds 50% of its total assets; or
(c) the capital attributable to its Islamic banking branches operations reaches the
minimum required capital specified by the State Bank for an Islamic banking
subsidiary.
(3) The State Bank may issue regulations, directives, instructions, notifications, circulars, or
guidelines, as the case may be, under this section from time to time.
39J. Penalties.__ The State Bank shall impose separate penalties on Islamic banking
institutions and Islamic financial institutions, specifically with reference to non-compliance with the
Principles of Shariah. Further, the State Bank may take penal action against members of Board of
Page 44 of 108
Directors, management, and personnel of other organs of governance, including Shariah governance,
for violation of their fiduciary duties and other obligations.
39K. Other provisions relating to Islamic banking.__ (1) The provisions of this part shall
be in addition to the other provisions of the Ordinance relating to Islamic banking and shall be read
accordingly.
(2) Except for the sub-sections (1), (2), (3) and (4) of section 26A, all other provisions of this
Ordinance mentioning the term “deposits” of conventional banks shall also be construed to cover
“Islamic deposit accounts” and “investment accounts” of Islamic banking institutions.
(3) All provisions of this Ordinance mentioning the term “depositors” of conventional banks
shall, also be construed to cover the “Islamic deposit account holders” and “investment account
holders” of Islamic banking institutions.
39L. Savings.__ Any regulations, directives, instructions, notifications, circulars, guidelines
or any act or thing done by the State Bank in relation to banking business which is based on Shariah
before the coming into force of this part shall be deemed to have been validly issued or done under
the Ordinance.]
1
[Part-IIB
Supervision]
40. Inspection.— (1) Notwithstanding anything to the contrary contained in section 138 of
2
the [Companies Ordinance, 1984 (XLVII of 1984)], the State Bank may, at any time, and, on being
directed so to do by the 3[Federal Government], shall, inspect any banking company and its books
and accounts.
(2) The inspection shall be carried out by such officer of the State Bank as the State Bank
may direct.
(3) The State Bank shall supply to the banking company a copy of its report on the
inspection made under this section.
(4) It shall be the duty of every director or other officer of the banking company 4[or any
company or firm or person referred to in section 27A] to produce to any officer, hereafter in this
section called the inspecting officer, making an inspection under this section, all such books,
accounts and other documents in his custody or power and to furnish him with such statements and
information relating to the affairs of the banking company 4[or any company or firm or person
referred to in section 27A] and within such time as the inspecting officer may require.
(5) The inspecting officer may examine on oath any director or other officer of the banking
company in relation to its business and may administer an oath accordingly.
5
[(6) The State Bank shall, if it has been directed by the Federal Government to make an
inspection, and, in any other case, may, submit a report to the Federal Government on any inspection
made under this section.]
5
(7) [* * * * * * *]
1
Ins. by Act No. XXIX of 2024, s. 19.
2
Subs. by Finance Act, 2007 (Act No. IV of 2007), s.4, (w.e.f. 01-07-2007).
3
Subs. by the Banking Companies (Amdt.) Act, 1972 (30 of 1972), s. 23 (w.e.f. 13-10-1972), for “Central Government”.
4
Ins. by the Finance Act, 1990 (7 of 1990), s. 4A.
5
Subs. and Omitted by Act XIV of 1997, s.10.
Page 45 of 108
1
[40A. Responsibility of State Bank—(1) Without prejudice to the powers conferred on
the State Bank under Section 40 and notwithstanding anything contained therein, it shall be the
responsibility and duty of the State Bank to systematically monitor the performance of every
banking company so as to ensure that it is complying with the applicable statutory criteria and
banking rules and regulations.
(2) In every case in which the management of a banking company is failing to discharge
its responsibility in accordance with the applicable statutory criteria and banking rules or
regulations, or is failing to protect the interests of depositors, or is advancing loans or finances
without due regard for the best interests of the banking company or for reasons other than the
merits, it shall be the duty of the State Bank, in addition to taking such remedial steps as may be
required in accordance with law, to report the shortcomings and violations on the part of the
banking company‘s management to the Federal Government every quarter, or more frequently, if
so deemed necessary, so as to prevent any grave or irreparable loss from being caused to the
banking company or its depositors, along with its recommendations and the action, if any, taken
by it.]
41. Power of the State Bank to give directions.—(1) Where the State Bank is satisfied
that—
(a) in the public interest; or
(b) to prevent the affairs of any banking company being conducted in a mann-
er detrimental to the interests of the depositors or in a manner prejudicial
to the interests of the banking company; or
(c) to secure the proper management of any banking company generally;
it is necessary to issue directions to banking companies generally or to any banking company in
particular, it may, from time to time, issue such directions as it deems fit, and the banking
companies or the banking company, as the case may be, shall be bound to comply with such
directions.
2
[(2) The State Bank may, from time to time, issue 3[orders, regulations, directions,
guidelines, instructions, notifications, and circulars or impose any condition] with respect to
activities and operations of banks and the institutions mentioned in section 3A as may be deemed
necessary by it for carrying out purposes of this Ordinance and matters ancillary thereto.]
2
[(3)] The State Bank may, on representation made to it or on its own motion, modify or
cancel any direction issued under sub-section (1), and in so modifying or cancelling any direction
may impose such conditions as it thinks fit, subject to which the modification or cancellation
shall have effect.
3
[(4)(a) The State Bank may direct any banking company or class of banking companies
to__
(i) submit a recovery plan, where applicable on a group-wide basis, in the
form, content and mamber as directed by the State Bank, outlining the
actions designed to run the banking company as a going concern and
1
Ins. by Act No. XIV of 1997, s.11.
2
Ins. and Re-numbered by Act IV of 07, s. 4 (w.e.f. 1-7-07).
3
Subs. and ins. by Act No. XXIX of 2024, s.20.
Page 46 of 108
return to business as usual, under such scenarios as identified by the banking company or
specified by the State Bank from time to time;
(ii) remove any impediments to the implementation of the plan and make
revisions in the recovery plan; and
(iii) revise and update its recovery plan regularly or in case of any material
charges in the circumstances of the banking company or as the State Bank
deems necessary.
(b) The banking company shall notify the State Bank immediately on any event that
may necessitate the implementation of its recovery plan.
(c) The recovery plan shall not prejudice the powers conferred on the State Bank to
take other measures provided under this Ordinance.]
1
[41A. Power of the State Bank to remove directors or other managerial persons
from office.— (1) where the State Bank is satisfied that—
(a) the association of any chairman or director or chief executive (by whatever
name called) or other officer of a banking company, not being lower in
rank than a branch manager, is or is likely to be detrimental to the interests
of the banking company or its depositors or otherwise undesirable; or
(b) in the public interest; or
(c) to prevent the affairs of a banking company being conducted in a manner
detrimental to the interest of its depositors or in a manner prejudicial to the
interests of the banking company; or
(d) to secure the proper management of any banking company;
it is necessary so to do, the State Bank may, for reasons to be recorded in writing, by order,
remove 2[suspend or debar] from office, with effect from such date as may be specified in the
order, any chairman or director or chief executive (by whatever name called) or other officer of
the banking company.
(2) No order under sub-section (1) shall be made unless the chairman or director or chief
executive or other officer has been given a reasonable opportunity of making a representation to
the State Bank against the proposed order:
Provided that if, in the opinion of the State Bank, any delay would be detrimental to the
public interest or the interests of the banking company or its depositors, the State Bank may, at
the time of giving the opportunity aforesaid or at any time thereafter and pending the
consideration of the representation aforesaid, if any, by order direct that—
(i) the chairman or, as the case may be director or chief executive or other
officer shall not, with effect from the date of the order,—
_____________________________________________________________________________
1
Ss. 41A, 41B and 41C ins. by the Banking Companies (Amdt.) Act, 1972 (30 of 1972), s. 13 (w.e.f. 13-10-1972).
2
Ins. by Act No. XXIX of 2024, s. 21.
Page 47 of 108
(a) act as such chairman or director or chief executive or other officer
of the banking company; or
(b) in any way, whether directly or indirectly, be concerned with, or
take part in the management of the banking company;
(ii) and any person authorised by the State Bank in this behalf shall act as such
chairman or director or chief executive of the banking company.
(3) Where any order under sub-section (1) is made in respect of a chairman or director or
chief executive or other officer of a banking company, he shall cease to be a chairman or, as the
case may be, a director or chief executive or other officer of the banking company and shall not
in any way, whether directly or indirectly, be concerned with, or take part in, the management of
the banking company or any other banking company for such period not exceeding three years as
may be specified in the order 1[or for such extended period as may be specified by the Governor,
State Bank of Pakistan].
(4) Any person appointed as chairman or director or chief executive under sub-section
(2) shall—
(a) hold office during the pleasure of the State Bank subject to such conditions
as may be specified in the order of his appointment and, subject thereto,
for such period, not exceeding three 1[years] as the State Bank may specify
2
[or for such extended period as may be specified by the Governor, State
Bank of Pakistan]; and
(b) not incur any obligation or liability for anything which is done or intended
to be done in his capacity as such chairman or director or chief executive.
(5) No person removed from office under sub-section (1) shall be entitled to claim any
compensation for the loss or termination of office.
41B. Power of the State Bank to supersede Board of Directors of banking
company.—(1) Where the State Bank is satisfied that—
(a) the association of the Board of Directors (by whatever name called) of a
banking company is or is likely to be detrimental to the interests of the
banking company or its depositors or otherwise undesirable; or
(b) for all any of the reasons mentioned in sub-section (1) of section 41A;
it is necessary so to do, the State Bank may, for reasons to be recorded in writing, by order,
supersede the Board of Directors of a banking company with effect from such date and for such
period as may be specified in the order.
(2) The period of supersession specified in an order under sub-section (1) may from time
to time be extended by the State Bank so, however, that the total period of supersession does not
exceed 1[three] years 2[or for such extended period as may be specified by the Governor, State
Bank of Pakistan].
1
Subs. by Act No. XIV of 1997, ss. 12-13.
2
Ins. by Ord. CXI of 02, s. 6-7
Page 48 of 108
(3) All powers and duties of the Board of Directors shall, during the period of super
session, be exercised and performed by such person as the State Bank may from time to time
appoint in this behalf.
(4) The provisions of sub-sections (2), (3), (4) and (5) of section 41A shall, with the
necessary modifications, apply to an order made under sub-section (1) or sub-section (3).
1[41C. Limitations.__ (1) No decision or order under section 41A, section 41B, clause (q)
of sub-section (2) of section 42, clause (i) and (iv) of sub-section(1) of section 42C, section 42D,
and sub-section (1) of section 42E shall be made except by the Executive Committee. Provided
that an order under section 41A, section 41B, clause (q) of sub-section (2) of section 42 and
section 42D shall be made by the Executive Committee on a report by the standing committee set
up by the State Bank for the purpose. All orders on decisions of the Executive Committee under
this sub-section shall be signed by the Chairman of the Executive Committee.
(2) Any person or banking company aggrieved by any decision or order of the Executive
Committee under sub-section (1) may make an appeal to the Board of Directors of the State Bank
whose decision shall be final.
(3) No action taken under sections 41A, 41B, sub-section (2) or part II-C shall be called
in question by or before any court, tribunal or other authority.]
2
[41D. Prosecution of directors, chief executives or other officers. Notwithstanding
anything contained in section 41A 1[and clause (a) of sub-section (1) of section 42E], the State
Bank may direct prosecution of a director or chief executive by whatever name called or other
officer who, in its opinion, has knowingly acted in a manner causing loss of depositor’s money or
of the income of the banking company.
Explanation:- For the purpose of this section a director or chief executive or other officer
shall be deemed to have acted knowingly if he has departed from established banking practices
and procedures or circumvented the regulations or related credit restrictions laid down by the
State Bank of Pakistan from time to time.]
1[42. Intervention triggers and powers of the State Bank.__ (1) The State Bank may
exercise any one or more of the powers under sub-section (2) of this section, if it is satisfied that
any of the circumstances exist under which__
(a) a banking company__
(i) has engaged any director, chief executive, by whatever name
called, or an officer of a banking company who is or is likely to be
detrimental to the interest of the banking company or its depositors
or otherwise undesirable;
(ii) is carrying on its business in a manner detrimental to the interests
of its depositors, creditors or other stakeholders;
(iii) has contravened any provisions or any restrictions or conditions
imposed on its license;
1
Subs., and ins. by Act No. XXIX of 2024, ss. 22-24.
2
Ins. by Act XIV of 1997, s.14.
Page 49 of 108
(iv) has contravened or circumvented any provision of section 41 or
any other provision of this Ordinance, or defaulted in complying
with any requirement of this Ordinance or of any order, rule,
direction or notification made or condition imposed thereunder;
(v) in any return, balance-sheet or other document or in any
information required or furnished by or under or for the purposes
of any provision of this Ordinance, makes a statement which is
false in any material particular, or omits to make a material
statement;
(vi) has failed or is likely to fail to meet capital adequacy or Minimum
capital requirements specified by the State Bank;
(vii) has failed or is likely to fail to meet the liquidity requirements as
specified by the State Bank;
(viii) has suffered deterioration in its financial condition; or
(ix) has engaged or is engaging in any unsafe, unsound, imprudent or
reckless business practices; or
(b) any person, being the chairman, director, chief executive, by whatever
name called, or an officer of a banking company:
(i) has breached fiduciary duties or engaged in reckless business
practices;
(ii) mismanages the affairs of the banking company or misuses his
position for gaining direct or indirect benefit for himself or any of
his family members;
(iii) contravenes, or attempts to contravene, or abets the contravention
of the provisions of this Ordinance; or
(iv) has failed to comply with the supervisory instructions by the State
Bank.
(2) Subject to sub-section (1), the State Bank may, keeping in view the gravity of the
situation and compliance behavior of the banking company, from time to time, exercise any one
or more of the following powers, namely__
(a) caution or prohibit the banking company against entering into any
particular transaction or class of transactions;
(b) require the banking company to refrain from taking such actions as it may
specify in relation to any matter relating to the business of such banking
company or to take such action in relation thereto as the State Bank thinks
fit;
Page 50 of 108
(c) require the banking company to submit a plan of action for meeting the
capital, or liquidity requirements and to address any other major
supervisory concerns;
(d) require the banking company to meet such capital and liquidity
requirements as may be specified by the State Bank for such banking
company;
(e) require the banking company to call a meeting of its directors for the
purpose of considering any matter relating to or arising out of the affairs of
the banking company, or require an officer of the banking company to
discuss any such matter with an officer of the State Bank;
(f) require the banking company or Board of Directors of the banking
company to furnish documents of commitment for compliance with the
measures specified by the State Bank and to secure the interests of its
depositors;
(g) depute one or more of its officers to watch the proceedings at any meeting
of the Board of Directors of the banking company or of any committee or
of any other body constituted by it, require the banking company to give
an opportunity to the officers so deputed to be heard at such meetings and
also require such officers to send a report of such proceedings to the State
Bank;
(h) require the Board of Directors of the banking company or any committee
or any other body constituted by it to give in writing to any officer
specified by the State Bank in this behalf at his usual address all notices of,
and other communications relating to, any meeting of the Board,
committee or other body constituted by it;
(i) appoint one or more of its officers to observe the manner in which the
affairs of the banking company or of its offices or branches are being
conducted and make a report thereon;
(j) require the banking company to make such changes in the management
within such time as the State Bank may consider necessary in consequence
of the state of affairs disclosed during or by the inspection;
(k) require such changes in the Board of Directors of the banking company, as
the State Bank may consider necessary;
(l) suspend from office, the Chairman or director or chief executive officer,
by whatever name called, or other officer of the banking company, with
effect from such date and for such period as may be specified by the State
Bank;
(m) require the banking company to convene the general meeting of the
members for purposes of the adoption of measures deemed necessary by
the State Bank;
Page 51 of 108
(n) require banking company to limit any discretionary remuneration to any
director, chief executive officer or other officer of the banking company
concerned;
(o) require the banking company to implement its recovery plan and report its
progress to the State Bank at such intervals as may be specified by the
State Bank;
(p) require the divestment of specified loss-making or risky assets or business
lines; or
(q) require the banking company to carry out any capital reduction and cancel
any portion of shares of the banking company which is depleted or
unrepresented by available assets; or dilute the participation of the existing
shareholders by issuing new shares or reduce full or part of the preference
shares, subordinated debt or sub-ordinated Sukuk, by whatever name
called, as issued by the banking company or convert these instruments into
ordinary shares, as permitted by the terms of such instruments. Any action
under this clause shall have effect notwithstanding the provisions
contained in sections 89 to 97 of the Companies Act, 2017 (XIX of 2017),
sub-section (2) of section 87 the Securities Act, 2015 (III of 2015) or any
other law for the time being in force.
(3) Where the voting shares of a banking company are to be acquired for the purposes of
a recapitalization as an early intervention measure under this section, the Securities and
Exchange Commission of Pakistan, upon a request by the prospective acquirer and in
consultation with the State Bank, may exempt any such acquisition from section 111 of the
Securities Act, 2015, where applicable.]
1[Part-IIC
Resolution of Banking Companies
42A. Resolution authority.__ Without prejudice to its powers under this Ordinance and
any other law for the time being in force, the State Bank shall be the Resolution authority of
banking companies and institutions specified under section 3A of this Ordinance.
42B. Resolution objectives.__ The primary objectives of Resolution shall be contributing
to the stability of the financial system of Pakistan and the protection of the interest of depositors.
42C. Resolution planning.__ (1) To give effect to the Resolution objectives as set out in
section 42B, the State Bank may__
(i) prepare a plan for the orderly Resolution of a systemically important bank
as specified by the State Bank, or any other banking company and update
such plans at regular intervals or at any other time it deems necessary;
(ii) at regular intervals or at any other time as it deems necessary, conduct
resolvability assessment of a systemically important bank or any other
1
Ins. by Act No. XXIX of 2024, s. 25.
Page 52 of 108
banking company with a view to identify any impediments for the orderly
Resolution of such banking company;
(iii) direct the banking company concerned to demonstrate that there is no
impediment to its resolvability; and may call any information or document
or assistance from the banking company concerned, its sponsors, or any
entity within the group of which the banking company concerned is a part,
within the time, form and manner set out in the direction; and
(iv) take such steps for the removal of impediments identified under this
section or issue directions to the banking company concerned, or its
sponsor shareholders, to take any measures for removal or mitigation of
the effects of impediments within a time period as specified by the State
Bank in relation to its legal, operational, financial and group structure,
including any measures for the separation of critical functions from other
functions; intra-group dependencies, products, assets, rights or liabilities
for effective Resolution of the banking company concerned.
(2) The banking company concerned and any other person, to whom any direction has
been issued under this section, shall be bound to comply with such direction.
(3) The Resolution plans shall not in any way prejudice the powers conferred on the State
Bank to take other measures provided under this Ordinance.
42D. Resolution triggers.__ (1) The State Bank may, by an order in writing stating
reasons, place a banking company under Resolution, if the State Bank is satisfied that one or
more of the circumstances exist under which the banking company,__
(i) has become or is likely to become insolvent;
(ii) has failed to comply with the capital requirement specified by the State
Bank; and
(a) has no reasonable prospect of becoming compliant with the
relevant requirement within a reasonable timeframe in the opinion
of the State Bank;
(b) fails to become adequately capitalized when required to do so;
(c) fails to submit a capital restoration plan acceptable to the State
Bank within the time specified; or
(d) fails to implement a capital restoration plan to the satisfaction of
the State Bank;
(iii) has suspended or is likely to suspend payments as these fall due;
(iv) has defaulted or is likely to default in making payments to depositors;
(v) is part of a group, one or more entities of which, is under liquidation, or in
respect of which a custodian, receiver, administrator or liquidator has been
Page 53 of 108
appointed, and the assets and liabilities of such entity or its links with the
banking company are such that it may impair the ability of the banking
company to continue its operations in a safe and sound manner;
(vi) is a branch or subsidiary of a banking company whose license to carry on
banking business in the country of its origin has been cancelled or any
Resolution action or insolvency proceeding in the country of origin does
not sufficiently protect the financial stability of Pakistan and the interest of
depositors, or the State Bank considers that no action will be taken in
respect of a failing banking company in its country of origin;
(vii) fails to implement any of the measures as required under section 42,
including failure to provide a plan of action or documents of commitment
or has breached requirements under any plan of action or documents of
commitment submitted to the State Bank;
(viii) is otherwise in a situation or circumstance which in the opinion of the
State Bank may materially impair the ability of the banking company to
make payments, meet its obligations or otherwise continue its operations;
or
(ix) has contravened, circumvented or failed to comply with any requirement
of this Ordinance in a manner that seriously prejudices the financial
stability in Pakistan and the interests of depositors, or has continued such
contravention, circumvention or failure beyond such period or periods as
may be specified in that behalf by the State Bank from time to time.
(2) The adoption of any supervisory action or any early intervention measures as set out
in section 42 or the submission of any report under sub-section (2) of section 40A shall not be a
precondition for Resolution.
(3) No order under this section shall be made unless the banking company concerned has
been given an opportunity of making a representation to the State Bank. Provided that if in the
opinion of the State Bank, any delay would be detrimental to the achievement of Resolution
objectives, the State Bank may, at the time of giving the opportunity aforesaid or at any time
thereafter and pending the consideration of the representation aforesaid, if any, make an order
under sub-section (1).
(4) An order made under sub-section (1) shall be notified to the banking company
concerned and a summary of it shall be published, as soon as practical, on the State Bank’s
website with due regard to the confidentiality requirements.
(5) Except as otherwise provided in the order made by the State Bank under sub-section
(1) or at any time thereafter in consultation with the Securities and Exchange Commission of
Pakistan, the trading on securities exchange in shares and debt instruments of the baking
company under Resolution, and disclosure and reporting requirements applicable to such a
banking company by virtue of being a listed entity shall remain suspended:
Provided that provision of this sub-section shall have effect notwithstanding anything
contained in the Companies Act, 2017 (XIX of 2017), the Securities Act, 2015 (III of 2015), the
Page 54 of 108
Securities & Exchange Commission of Pakistan Act, 1997 or any other law for the time being in
force.
42E. Resolution powers.__ (1) Where an order is made under section 42D, the State Bank
shall have full control over the affairs of the banking company and may exercise one or more of
the following powers, separately or in combination, to achieve its Resolution objectives:
(a) remove directors or chief executive, by whatever name called, or other
officer of a banking company, not being lower in rank than a branch
manager;
(b) supersede the Board of Directors of the banking company:
Provided that all powers of the general meeting of members, the
Board of Directors, chief executive officer, or any other officer shall be
vested with the State Bank, and the State Bank in this capacity may require
any director or officer of the banking company to carry out any task it
specifies;
(c) appoint one or more, officials of the State Bank or, persons meeting its fit
and proper test as an administrator for management and operation of the
banking company under Resolution. All persons appointed under this
clause shall perform their powers and duties under the instructions issued
by, and be entitled to such remuneration as may be specified by, the State
Bank;
(d) issue an order of moratorium in respect of a banking company under
section 42F;
(e) carry out reconstruction or amalgamation of the banking company under
section 42G;
(f) reduce or extinguish the interest or rights which the members, depositors
and other creditors have in or against the banking company, to such extent
as the State Bank consulers necessary;
(g) transfer in full or in part the business, assets and liabilities of the banking
company to a bridge bank under section 42H;
(h) cancel a license granted to a banking company under section 27; or
(i) make an application to the High Court for the winding up of the banking
company under section 49.
(2) The State Bank may, while exercising any of the powers referred to in sub-section (1)
or otherwise, take one or more of the following actions__
(a) engage at the expense of the banking company under Resolution;
independent attorneys, accountants, auditors, valuation experts and
consultants, by whatever name called, on such terms and conditions as
may be specified by the State Bank:
Page 55 of 108
Provided that, to ensure timely and orderly Resolution, the
provisions of any law related to public procurement of services, for the
time being in force, shall not apply to hiring of various service providers
under this sub-section.
(b) without prejudice to the generality of clause (a), direct or arrange an
independent valuation of the assets and liabilities or shares of the banking
company for the application of sub-section (1) or, as the case may be, for
the application of sub-section (7) or for any other purpose as may be
deemed necessary by the State Bank:
Provided that__
(i) such a valuation shall be conducted by a valuator who shall be of
good repute and has international experience in the valuation or
auditing or has affiliations with audit or valuation firms that have
such international experience;
(ii) such a valuation shall be carried out based on conservative
assumptions and in accordance with the international valuation
standards with due regard to specificities of banking companies,
including regulatory capital requirements. Such valuation, if
carried out for the Resolution purposes, shall not assume any
potential future provision of public funding or the State Bank
financing under section 17G of the State Bank of Pakistan Act,
1956 (XXXIII of 1956);
(iii) the State Bank may specify the general procedures and
methodology, and other terms and conditions for valuations,
having regard to the purpose of the valuation; and
(iv) if conducting an independent valuation is not possible for
Resolution purposes, including due to the urgency of Resolution,
the State Bank itself may conduct a provisional valuation; and
exercise any Resolution power based on such valuation. The State
Bank shall as soon as practicable thereafter cause an independent
valuation to be conducted.
(c) require any person to continue provision of such services as are necessary
for continuity of critical functions of the banking company under
Resolution, or a transferee bank including the bridge bank, and such
service provider shall continue these services under the terms and
conditions existing prior to Resolution;
(d) require the banking company under Resolution to provide necessary
services to a transferee bank including the bridge bank for such time
period as may be specified by the State Bank;
(e) upon a request of transferee bank, transfer assets and liabilities back to the
transferring bank, within a period specified during the time of transfer or
Page 56 of 108
in case such assets or liabilities do not meet the criteria specified, during
the transfer;
(f) without prejudice to the banking company’s right to terminate contracts as
per the contractual terms, rescind contracts where the State Bank considers
that the performance of outstanding obligations would be detrimental to
the Resolution objectives:
Provided that without prejudice to the provisions of this section on
financial contracts, the counterparties of the banking company concerned
may not terminate, modify, or accelerate the rights and obligations under a
contract solely because of an order made under section 42D or the exercise
of any powers under section 42E by the State Bank; or
(g) temporarily suspend the right of the banking companies’ counterparties to
early terminate or modify or accelerate financial contracts, to which the
banking company under Resolution is a party, where such rights arise due
to an order made under section 42D or due to the exercise, of any
resolution powers:
Provided that the suspension period shall not exceed two business
days, and substantive obligations under the contract shall continue to be
performed.
(3) Unless provided otherwise in this ordinance, during the Resolution of a banking
company, losses, if any, shall be imposed in the reverse order of the liquidation claims as
provided in section 58.
(4) Unless otherwise strictly necessary to achieve the Resolution objectives, the State
Bank shall avoid treating a liability and assets securing such liability separately during the
transfer of assets and liabilities, or transferring part of the rights and liabilities that are protected
under a financial contract.
(5) For the application of this section, the State Bank shall specify the financial contracts.
(6) Subject to sub-section (7), the State Bank may treat one or more creditors of the same
class differently, if this is necessary to avoid a contagion in the financial system or a destruction
of value for creditors in general, or otherwise, it would not be possible to implement the relevant
Resolution action within a reasonable timeframe.
(7) A shareholder or creditor of the banking company who, as a result of the exercise of
Resolution powers, recovered less than what he would have recovered in case of a winding up
order under this Ordinance, may be compensated for the difference, only where the State Bank
determines such difference based on an independent valuation caused under sub-section (2). Such
valuation shall presume that the banking company concerned would be placed under winding up
immediately before the issuance of an order as per section 42D. The valuation of assets shall be
based on liquidation values. Any value created or preserved in the banking company as a result
of any public support or financing under section 17G of the State Bank of Pakistan Act, 1956
(XXXIII of 1956), shall be deducted in the calculation of difference. Any such compensation
shall be paid by the Deposit Protection Corporation under clause (c) of sub-section (1) of section
Page 57 of 108
22C of the Deposit Protection Corporation Act, 2016 (XXXVII of 2016) or otherwise, from
funds obtained under section 42I.
(8) Powers under this section shall not be subject to the approval or consent of the
shareholders, debtors, creditors or any counterparty of the banking company or that of the bridge
bank.
(9) The protection and indemnification provided in section 94 shall also apply to any
person appointed, engaged or directed by the State Bank in pursuance of the powers conferred on
it under this section and section 42H.
(10) The provisions of this section shall have effect notwithstanding anything to the
contrary contained in any other law or contract for the time being in force.
42F. Order of moratorium.__ (1) Notwithstanding anything contained in the provisions
of this Part or in any other law or any agreement or other instrument, for the time being in force,
where an order is made under sub-section (1) of section 42D, the State Bank may make an order
of moratorium in respect of a banking company, staying the commencement or continuance of all
actions and proceedings against the banking company for a fixed period of time on such terms
and conditions as it deems fit and proper and may from time to time extend the period so that the
total period of moratorium, including extension thereof, shall not exceed six months.
(2) Except as otherwise provided by any directions given by the State Bank in the order
under sub-section (1) or at any time thereafter, the banking company shall not during the period
of moratorium make any payment to any depositors, or discharge any liabilities or obligations to
any other creditors.
42G. Powers of State Bank to prepare scheme of reconstruction or amalgamation.__
(1) Where an order is made under sub-section (1) of section 42D, the State Bank may prepare a
scheme
(i) for the reconstruction of the banking company, restoring the capital of the
banking company to a level compliant with this Ordinance and sufficient
to sustain confidence in the banking company; or
(ii) for the amalgamation of the banking company fully or in part with any
other banking institution (in this section referred to as “the transferee
bank”).
(2) The scheme aforesaid may contain provisions for all or any of the following matters,
namely:__
(a) the constitution, name and registered office, the capital, assets, powers,
rights, interests, authorities and privileges, the liabilities, duties and
obligations, of the banking company on its reconstruction or, as the case
may be, of the transferee bank;
Page 58 of 108
(b) in the case of amalgamation of the banking company, the transfer to the
transferee bank of the business, properties, assets and liabilities of the
banking company on such terms and conditions as may be specified in the
scheme;
(c) any change in the Board of Directors, or the appointment of a new Board
of Directors, of the banking company on its reconstruction or, as the case
may be, [of the transferee bank] and the authority by whom, the manner in
which and the other terms and conditions on which, such change or
appointment shall be made and in the case of appointment of a new Board
of Directors or of any director, the period for which such appointment
shall be made;
(d) the development of new or alteration of the existing memorandum and
articles of association of the banking company on its reconstruction or, as
the case may be, of the transferee bank, for the purpose of altering the
capital thereof or for such other purposes as may be necessary to give
effect to the reconstruction or amalgamation;
(e) subject to the provisions of the scheme, the continuation by or against the
banking company on its reconstruction or, as the case may be, the
transferee bank, of any actions or proceedings pending against the banking
company immediately before the date of the order of moratorium or as the
case may be from the effective date of coming into force of the scheme;
(f) the cancellation or reduction, in part or whole, of the interest or rights
which the members, depositors and other creditors have in or against the
banking company before its reconstruction or amalgamation to such extent
as the State Bank considers necessary to recognize the accumulated losses
of the banking company:
Provided that the State Bank may close out and terminate a
derivative contract to determine the value of interests and rights before a
reduction under this clause.;
(g) the payment to depositors and other creditors in full satisfaction of their
claims in cash or otherwise, by converting the claims into shares or debt
that meets the conditions to qualify as regulatory capital, as specified by
State Bank__
(i) in respect of their interest or rights in or against the banking
company before its reconstruction or amalgamation; or
(ii) where their interest or rights aforesaid in or against the banking
company has or have been reduced under clause (f), in respect of
such interest or rights as so reduced;
(h) the allotment to the members of the banking company for shares held by
them therein before its reconstruction or amalgamation, whether their
interest in such shares has been reduced under clause (f) or not, of shares
Page 59 of 108
in the banking company on its reconstruction or, as the case may be, in the
transferee bank and where any members claim payment in cash and not
allotment of shares, or where it is not possible to allot shares to any
members, including if a member fails to meet the fit and proper test of the
State Bank. the payment in cash to those members in full satisfaction of
their claim__
(i) in respect of their interest in shares in the banking company before
its reconstruction or amalgamation; or
(ii) where such interest has been reduced under clause (f) in respect of
their interest in shares as so reduced;
(i) transfer rights and interests of members in shares to such persons on such
terms and conditions and at such consideration as may be specified in the
scheme in full satisfaction of their claims__
(i) in respect of their interest in shares in the banking company before
its reconstruction or amalgamation; or
(ii) where such interest has been reduced under clause (f) in respect of
their interest in shares as so reduced;
(j) cause the banking company concerned to issue new shares without
offering such shares to the members of the banking company or issue debt
instruments that would meet the conditions to qualify as regulatory capital
as specified by the State Bank, or amend or alter the maturity of or the
amount of interest payable under such debt instruments issued by the
banking company before an order made under section 42D on
reconstruction of the banking company;
(k) the continuation of the services of all the employees of the banking
company, excepting such of them who, not being workmen within the
meaning of the Industrial Relations Ordinance, 1969 (XXII of 1969), are
specifically mentioned in the scheme, in the banking company itself on its
reconstruction or, as the case may be, in the transferee bank at the same
remuneration and on the same terms and conditions of service, which they
were getting or, as the case may be, by which they were being governed
immediately before an order made under sub-section (1) of section 42D:
Provided that the scheme shall contain a provision that__
(i) the banking company shall pay or grant not later than the expiry of
the period of three years from the date on which the scheme is
approved by the State Bank or sanctioned by Federal Government,
as the case may be, to the said employees the same remuneration
and the same terms and conditions of service as are applicable to
employees of corresponding rank or status of a comparable
banking company to be determined for this purpose by the State
Bank whose determination in this respect shall be final;
Page 60 of 108
(ii) the transferee bank shall pay or grant not later than the expiry of
the aforesaid period of three years, to the said employees the same
remuneration and the same terms and conditions of service as are
applicable to the other employees of corresponding rank or status
of the transferee bank subject to the qualifications and experience
of the said employees being the same as or equivalent to those of
such other employees of the transferee bank:
Provided further that if in any case under clause (ii) of the
first proviso any doubt or difference arises as to whether the
qualification and experience of any of the said employees are the
same as or equivalent to the qualifications and experience of the
other employees of corresponding rank or status of the transferee
bank, the doubt or difference shall be referred to the State Bank
whose decision thereon shall be final;
(1) notwithstanding anything contained in clause (k) where any of the
employees of the banking company, not being workman within the
meaning of the Industrial Relations Ordinance, 1969, are specifically
mentioned in the scheme under clause (k), or where any employees of the
banking company have by notice in writing given to the banking company
or, as the case may be, the transferee bank, at any time before the expiry of
one month next following the date on which the scheme is approved by the
State Bank or sanctioned by the Federal Government, as the case may be,
intimated their intention of not becoming employees of the banking
company on its reconstruction or, as the case may be, of the transferee
bank, the payment to such employees of compensation, if any, to which
they are entitled under the Industrial Disputes Ordinance, 1959, and such
pension, gratuity, provident fund and other retirement benefits ordinarily
admissible to them under the rules or authorizations of the banking
company immediately before the date of the order of moratorium;
(m) any other terms and conditions for the reconstruction of amalgamation of
the banking company;
(n) such incidental, consequential and supplemental matters as are necessary
to secure that the reconstruction of amalgamation shall be fully and
effectively carried out.
(3) Notwithstanding anything contained in clauses (f) and (g) of sub-section (2), the
scheme shall not provide for the reduction and conversion of the following:
(i) protected deposits under the Deposit Protection Corporation Act, 2016
(XXXVII of 2016);
(ii) any liabilities owed to tax or social security authorities;
(iii) liabilities in relation to contributions due to the Deposit Protection
Corporation in accordance with the Deposit Protection Corporation Act,
2016 (XXXVII of 2016);
Page 61 of 108
(iv) any liability and obligation to client that arises by virtue of holding or
managing the client’s assets as an agent;
(v) liabilities duly secured by financial, immovable or movable assets;
(vi) liabilities owed to the employees of the banking company except for the
incentive-based remuneration of the managers of the banking company;
(vii) liabilities with a remaining maturity of up to seven (7) days owed to
payment, settlement and clearing systems;
(viii) labilities to banking companies, excluding banking companies that are part
of the same group, with an original maturity of less than seven days;
(ix) liabilities to a commercial or trade creditor arising from the provision to
the banking company of goods or services that are critical to the daily
functioning of its operations, including information technology services,
utilities and rental, servicing and maintenance of premises; and
(x) any other claims that the State Bank has determined that their exclusion, in
whole or in part, is needed pursuant to sub-section (7) of section 42E.
(4) A copy of the scheme prepared by the State Bank shall be sent in draft to the
transferee bank and any other banking company concerned in the amalgamation, for suggestions
and objections, if any, within such period as the State Bank may specify for this purpose.
(5) The State Bank may make such modifications, if any, in the draft scheme as it may
consider necessary in the light of the suggestions and objections received from the transferee
bank, and any other banking company concerned in the amalgamation.
(6) Subject to sub-section (5), the scheme as approved by the State Bank shall come into
force on such date as the State Bank may specify in this behalf:
Provided that the scheme, if it involves use of public funds, shall be placed before the
Federal Government for its sanction and the Federal Government may sanction the scheme
without any modifications or with such modifications as it, in consultation with the State Bank
and having regard to the resolution objectives stated in section 42B and such safeguards
regarding the use of public funds as specified in section 42I, may consider necessary; and the
scheme as sanctioned by the Federal Government shall come into force on such date as the
Minister-in-charge may specify in this behalf:
Provided further that different dates may be specified for different provisions of the
scheme.
(7) Upon the coming into operation of the scheme or any provision thereof, the scheme or
such provision shall be binding on the banking company or, as the case may be, on the transferee
bank and any other banking company concerned in the amalgamation and also on all the
members, depositors and other creditors and employees of cach of those companies and of the
transferee bank, and on any other person having any right or liability in relation to any of those
companies or the transferee bank.
Page 62 of 108
(8) On such date as may be specified by the State Bank or, as the case may be, the
Minister-in-charge in this behalf, the properties and assets of the banking company shall, by
virtue of and to the extent provided in the scherne, stand transferred to, and vest in, and the
liabilities of the banking company shall, by virtue of and to the extent provided in the scheme,
stand transferred to, and become the liabilities of, the transferee bank. Rights and interest in the
shares of a banking company, by virtue of and to the estent provided in the scheme, shall stand
transferred to, and vest in, such persons as specified in the scheme:
Provided that the members, depositors and creditors whose interest and rights remain in
the banking company under Resolution shall have no rights or claims in respect of the assets and
liabilities transferred to the transferee bank.
(9) Where the scheme provided for the reduction of the rights and interests under clause
(f) of sub-section (2), any such interest in shares shall extinguish and any liability of the banking
company to such depositors and creditors shall be treated as discharged for all purposes to the
extent of such reduction, and these shall not be provable in any subsequent proceedings in
relation to the banking company under Resolution or any transferee bank or in any subsequent
winding up.
(10) If any difficulty arises in giving effect to the provisions of the scheme, the State
Bank or, as the case may be, the Federal Government may by order do anything not inconsistent
with such provisions which appear necessary or expedient for the purpose of removing the
difficulty.
(11) Copies of the scheme sanctioned by the Federal Government under proviso of sub-
section (6) or of any order made by the Federal Government under sub-section (10) shall be laid
on the table of the Legislature, as soon as may be, after the scheme has been sanctioned by the
Federal Government, or as the case may be, the order has been made
(12) Where the scheme is a scheme for amalgamation of the banking company, any
business acquired by the transferee bank under the scheme or under any provision thereof shall,
after the coming into operation of the scheme or such provision, be carried on by the transferee
bank in accordance with the law governing the transferee bank, subject to such modifications in
that law or such exemptions of the transferee bank from the operation of any provisions thereof
as the Federal Government, on the recommendation of the State Bank, may, by notification in the
official Gazette, make for the purpose of giving full effect to the scheme:
Provided that no such modification or exemption shall be made so as to have effect for a
period of more than seven years from the date of the acquisition of such business.
(13) Nothing in this section shall be deemed to prevent the amalgamation with one or
more banking institutions by a single scheme of several banking companies.
(14) The provisions of this section and of any scheme made under it shall have effect
notwithstanding anything to the contrary contained in any other provisions of this Ordinance or
in any other law or any agreement, award or other instrument for the time being in force.
(15) In this section, “banking institution” and “banking company” mean any banking
company and includes National Bank of Pakistan, investment finance companies. venture capital
companies, housing finance companies, leasing companies and any other financial institution
covered under section 3A.
Page 63 of 108
42H. Bridge bank.__ (1) The State Bank may, prior to or during the Resolution of a
banking company, establish a bridge bank as defined in clause (da) of sub-section (1) of section
5, and in exercise of the powers under clause (g) of sub-section (1) of section 42E to:
(a) transfer those of the assets and liabilities of the banking company
concerned as determined by the State Bank for orderly Resolution; and
(b) initiate the process for liquidation of the banking company concerned.
(2) The value of the liabilities transferred to a bridge bank shall not exceed the total value
of the assets transferred from the banking company under resolution or funds provided by the
Deposit Protection Corporation under clause (a) of sub-section (1) of section 22C of the Deposit
Protection Corporation Act, 2016 (XXXVII of 2016), or otherwise, from temporary public
funding obtained under section 42I.
(3) Notwithstanding anything contained in the Companies Act, 2017 (XIX of 2017) or
any other law for the time being in force regarding the incorporation of companies, issuance of
shares of other instruments of ownership, Memorandum and Articles of association of the
companies, listing of companies, and payment of any fees, duties and taxes for these purposes,
the bridge bank shall be incorporated, its share capital issued and allotted, and business
commenced, by the order of the State Bank.
(4) The bridge bank shall be a member of the Deposit Protection Corporation.
(5) The funding for a bridge bank including its capital shall be secured under section 42I
from, and its shares shall be allotted to, the Federal Government.
(6) The State Bank may prepare a scheme for the establishment of, transfer of all or part
of the assets and liabilities to, and the management of the bridge bank, and the exit of the bridge
bank from public control and the provisions of section 42G shall apply mutatis mutandis to such
a scheme.
(7) The State Bank may exempt the bridge bank from compliance with any regulatory and
supervisory requirement including capital requirements, as may be necessary, for a period of up
to six months, which can be extended once for up to a further six months if deemed necessary by
the State Bank, to facilitate business of the bridge bank or to maintain the stability of the
financial system.
(8) The State Bank shall appoint a person meeting its fit and proper test as an
administrator to manage the bridge bank and shall specify the responsibilities and remuneration
of such person, who shall be subject to the instructions issued to him by the State Bank:
Provided that no State Bank Official can be appointed as an administrator of the bridge
bank.
(9) Within a period of three years from the establishment of a bridge bank under sub-
section (1), the State Bank shall take all possible measures to utilize one of the following options:
(a) merger of the bridge bank with another banking company;
(b) sale of majority shareholding of the bridge bank to one or more persons;
Page 64 of 108
(c) transfer whole or substantial part of the assets and liabilities of the bridge
bank to one or more banking companies:
Provided that the State Bank shall be at liberty to delay utilization
of the options provided under this sub-section beyond the said period of
three years where it is satisfied that the delay_ would be in the interests of
its Resolution objectives, for such period as it thinks fit, in which instance
the State Bank shall publish on its website the reasons for such extension;
so however the period of each extension shall not exceed one year;
(10) Where in the opinion of the State Bank, none of the options given under sub-section
(9) is possible, or where no further extension in term of the bridge bank is warranted, the bridge
bank shall be wound up under section 59 or otherwise under section 49.
42I. Temporary Public Funding for Resolution.__ (1) Where an order has been made
under section 42D and in the opinion of the State Bank, public funding is required for the orderly
Resolution of the banking company or a bridge bank, the Federal Government, upon a
recommendation of the State Bank, may provide temporary financing for__
(a) contributing to the capital of the banking company or the bridge bank,
whether in the form of share capital to take a controlling interest or debt
that meets the conditions to qualify as regulatory capital as per the
requirements specified by the State Bank;
(b) paying consideration, if any, to acquire shares of the banking company
under Resolution;
(e) making of a loan, advance, or financing to the banking company or the
bridge bank;
(d) guaranteeing the assets and liabilities of the banking company or the
bridge bank;
(e) paying for any cost incurred on Resolution of a banking company or
establishment and operationalization of a bridge bank and any other cost
incidental thereto;
(f) Paying for the compensation, if any, under sub-section (7) of section 42E;
or
(g) any other financing as deemed necessary to support the orderly
Resolution:
Provided that, actions referred to in clauses (c) and (d) can also be
taken with respect to the transferee bank in the context of a scheme of
amalgamation prepared under section 42G of this ordinance.
(2) No financing under sub-section (1) shall be provided by the Federal Government
unless the following conditions are met:__
Page 65 of 108
(a) the orderly and timely Resolution of the banking company is necessary for
maintaining the stability of the financial system;
(b) the amount of funding available from the Deposit Protection Corporation to
finance Resolution, as permitted under the Deposit Protection Corporation
Act, 2016 (XXXVII of 2016), or any private sector funding would be
insufficient, is not available within a reasonable timeframe;
(c) at a minimum, holders of all classes of share capital or any sub-ordinated debt
have absorbed or will absorb any losses that existed immediately before an
order is made under section 42D; and
(d) the State Bank is of the opinion that the banking company or the bridge bank
will become viable with the implementation of a restructuring plan to the
satisfaction of the State Bank.
(3) Where the Federal Government becomes an owner of a controlling interest under sub-
section (1), the banking company under Resolution or the bridge bank shall be managed on a
commercial and professional basis and shall be subject to enhanced supervision by the State Bank.
The concerned banking company or, or as the case may be, the bridge bank, shall develop a plan to
the satisfaction of the State Bank and the Ministry of Finance for its exit from the public control
within a reasonable time frame.
(4) Any funding provided under sub-section (1), net of expected recoveries, and any related
costs, shall be recouped within a reasonable time frame from the institutions for which the State Bank
is the Resolution authority.
(5) The Federal Government may, in consultation with the State Bank, prescribe rules for
provision of the temporary public funding and the recoupment of such funds from the institutions for
which the State Bank is the Resolution authority, and procedures for the utilization of exit options in
a fair and transparent manner having due regard to the timing, market conditions and confidentiality
requirements.]
43. Certain provisions of the Ordinance not to apply to certain banking companies.—
(1) The provisions of section 13, sub-section (1) of section 14, and sections 21, 22, 29 and 30 shall
not apply to a banking company—
(a) which has been refused a licence under section 27, or prohibited from
accepting fresh deposits by a compromise, arrangement or scheme sanctioned
by a court or by any order made in any proceeding relating to such
compromise, arrangement or scheme, or prohibited from accepting deposits
by virtue of any alteration made in its memorandum; or
(b) whose licence has been cancelled under section 27.
(2) Where the State Bank is satisfied that any such banking company as is referred to in sub-
section (1) has repaid, or has made adequate provision for repaying all deposits accepted by the
banking company, either in full or to the maximum extent possible, the State Bank may, by notice
published in the official Gazette, notify that the banking company has ceased to be a banking
company within the meaning of this Ordinance, and thereupon all the provisions of this Ordinance
applicable to such banking company shall cease to apply to it, except as respects things done or
omitted to be done before such notice.
Page 66 of 108
1 2
[ [PART―IID]
TRANSACTIONS OF BANKING BUSINESS ILLEGALLY BY COMPANIES, ETC.
43A. Power to call for certain information, etc.— Where it appears to the State Bank
that a company 3[,firm] or any other person is transacting in any manner or form whatsoever the
business, of banking in contravention of sub-section (1) of section 27 3[,or is receiving or has
received deposits of money in contravention of section 27A] the State Bank may—
(a) direct the company 3[,firm] or such other person, or any person who is, or
has at any time been, dealing, doing business or associated in any manner
with the company 3[,firm] or such other person, to give or furnish to the
State Bank, within such time as the State Bank may specify in its
requisition, such information, documents or records respecting any
business carried on by the company 3[,firm] or such other person as may
be within its or his knowledge or in or under its or his possession, custody
or control;
(b) authorise any person to enter and search any premises and seize books,
accounts or other documents or records respecting any business carried on
by the company 3[,firm] or such other person as may be in or under the
possession, custody or control of the company 3[,firm] or such other
person or a person who is, or has at any time been, dealing, doing business
or associated in any manner with the company 3[,firm] or such other
person, or any officer or employee of the company 3[,firm] or such other
person or of the person dealing, doing business or associated with the
company 3[,firm] or such other person;
(c) inspect or examine, or cause to be inspected or examined, the company,
3
[firm] or such other person, or a person who is, or has at any time been,
dealing, doing business or associated with it or him as aforesaid, or any
officer or employee of the company 3[,firm] or such other person or of the
person dealing, doing business or associated with the company 3[,firm] or
such other person, and any of its or his books, accounts or other documents
or records referred to in clause (b); and
exercise, as far as may be applicable, in relation to the company 3[,firm] or
(d)
such other person, or any person who is, or has at any time been, dealing,
doing business or associated with it or him as aforesaid, the powers
conferred on the State Bank by sub-sections (1), (2), (4) and (5) of section
40.
3
[43AA. Special provisions.—(1) Where the State Bank has called for information
under section 43A from a company, firm or person and it appears to the State Bank that, in the
interest of the persons from whom the deposits of moneys were received, it is necessary that the
moneys received and other assets of the company, firm or person, whether held in the name of
that company, firm or person or of any other person, are protected and preserved, the State Bank
may, without prejudice to any other action or proceedings which may be taken against such
company, firm or person under any other provisions of this Ordinance or any other law for the
time being in force, make an order in writing—
1
New part II-A ins. by the Banking Companies (Amdt.) Ordinance, 1979 (56 of 1979), s. 3.
2
Subs. by Act No. XXIX of 2024, s.26.
3
Ins. by the Finance Act, 1990 (7 of 1990), s. 4A.
Page 67 of 108
(a) appointing one or more persons as interim receivers authorising him or, as
the case may be, each one of them to—
(i) enter and search any premises and seize books of accounts or other
documents or records of such deposits of money; and
(ii) take in his custody, on behalf of the State Bank, all moneys, cash
securities, title deeds, properties, whether moveable or immovable,
belonging to such company, firm or person, including those being
held on behalf, or in the name, of any director, manager, officer,
partner, employee, agent, beneficiary or transferee of such
company, firm or person or their dependants;
(b) directing any bank, financial institution or person to freeze all moneys
deposited with it or him on behalf of the company, firm or person or of
any director, manager, officer, partner or employee, agent, beneficiary or
transferee of such company, firm or person appointed by it under clause
(a);
(c) authorising a person appointed under clause (a) to take all necessary steps
and measures for identifying the assets and properties of the company,
firm or person and for realisation, protection and preservation thereof;
(d) restraining any company, firm or person or any director, manager, officer,
partner or employee or agent, beneficiary or transferee of such company,
firm or person or their dependants or any other person deriving or claiming
title through any of them from alienating, transferring, selling, assigning,
disposing of or parting with possession of any property, movable or
immovable, or deriving any benefit, rent or income therefrom; and
(e) making such orders for realisation, protection and preservation of deposits
of money and other assets and properties of the company, firm or person
as it may deem fit.
(2) An order made under sub-section (1) shall, unless it is earlier withdrawn in pursuance
of the proviso to sub-section (1) of section 43B, remain in force until possession of the moneys,
cash securities, title deeds, properties, books of account, documents or records to which the order
relates is taken over by the official liquidator or, as the case may be, the High Court, in pursuance
of an order of the High Court under section 43F:
Provided that any order made under sub-section (1) shall not prevent the High Court from
determining the right of a person claiming to have acquired the property or assets from the
company, firm or person, bonafide and for valuable and adequate consideration which such
person shall be required to prove as paid from his own resources.
(3) An order made under sub-section (1) may be served on the Registrar of Joint Stock
Companies or such other officer or authority or person as the State Bank may deem proper.
(4) If any person authorised under sub-section (1) require assistance of the police or any
other civil authority in the exercise of his powers or discharge of his functions thereunder, he
may send a requisition to the officer in charge of a police station or to such authority who shall
on such requisition render the assistance required.]
Page 68 of 108
43B. Power to make declaration.—(1) Where the State Bank, after making such inquiries
as it may deem fit, is of opinion that a company 1[,firm] or person referred to in section 43A is
transacting in any manner or form whatsoever the business of banking in contravention of sub-section
(1) of section 27, 1[or is receiving or has received deposits of money in contravention of section 27A]
the State Bank may, after giving the company 1[,firm] or such person an opportunity of showing
cause against the proposed action being taken, make a declaration to that effect [:]1
1
[Provided that, in a case in which the State Bank has made an order under sub-section (1) of
section 43AA in respect of a company, firm or person, the State Bank shall make a declaration under
this sub-section in respect of such company, firm or person within three months of the making of
such order or within such further time, not exceeding three months in the aggregate, as the High
Court may allow, or withdraw such order.]
1
[(2) The State bank shall publish, or cause to be published, a declaration made under sub-
section (1) in two newspapers having wide circulation in the area in which the registered office of the
company or firm, or the principal office of the person, to which or to whom the declaration relates is
situated; and, upon such publication, the company, firm or such person or the chief executive, by
whatever name called, or directors, managers, officers, employees or agents of the company or
partners, managers, officers, employees or agents of the firm, or such person, or any other person
referred to in sub-sections (1), (3) or (4) of section 43D or section 43E, shall not be heard to plead
ignorance of the making of the declaration.]
(3) A declaration under sub-section (1) shall, for the purposes of this Part, be conclusive
proof of the fact stated therein.
43C. Consequences of a declaration under section 43B.—(1) A company 1[,firm] or other
person in respect of which or whom a declaration has been made under sub-section (1) of section 43B
shall, on the publication of such declaration in pursuance of sub-section (2) of that section, cease to
function or to transact business and any transaction with such company 1[,firm] or person, or with any
person acting or purporting to act for and on behalf of such company 1[,firm] or person, on or after
the publication of the declaration as aforesaid, shall be void.
(2) The provisions of sub-section (1) and sections 43D, 43E and 43F shall, as far as may be,
apply to a company or undertaking which is an associated undertaking of a company 1[,firm] or
person in respect of which or whom a declaration under sub-section (1) of section 43B is made.
Explanation.—In this sub-section, “undertaking” and “associated undertaking” have the same
meaning as in the monopolies and Restrictive Trade Practices (Control and Prevention) Ordinance,
1970 (V of 1970).
43D. Deposit of cash and preservation of assets, etc.—(1) Notwithstanding anything
contained in section 43C, where a declaration under sub-section (1) of section 43B has been made in
respect of a company 1[,firm] or other person, every person who has in his possession or custody, or
under his control, any moneys, movable properties, shares, securities of any description or title deeds
relating to property which belong to the company 1[,firm] or such other person shall forthwith
deposit, or cause to be deposited, such moneys, movable properties, shares, securities and title deeds
with any of the banks referred to in the Schedule to the Banks (Nationalization) Act, 1974 (XIX of
1974), or the State Bank or any person authorised by the State Bank in this behalf.
1
Ins., subs. and added by the Finance Act, 1990 (7 of 1990), s. 4A.
Page 69 of 108
(2) If any person who is required by sub-section (1) to deposit, or to cause to be
deposited, any moneys, movable properties, shares, securities or title deeds fails to do so within
two days of the publication of the declaration under sub-section (1) of section 43B, any person
authorised by the State Bank in this behalf may enter and search any premises and seize such
moneys, movable properties, shares, securities or title deeds and deposit, or cause to be
deposited, the same in accordance with sub-section(1).
1
[(3) Until such time as an official liquidator, official assignee, interim receiver, receiver
or official receiver, as the case may be appointed by the Court on an application made under
section 43F takes over the possession, custody or control of any books, documents, records and
assets of a company, firm or person in respect of which or whom a declaration under sub-section
(1) of section 43B has been made, including any actionable claims to which such company, firm
or person is, or appears to be, entitled, the chief executive, by whatever name called, and a
director, manager, officer, employee and agent of such company, or a partner, manager, officer,
employee and agent of such firm or person, and every other person who may have in or under his
possession, custody or control such books, documents, records, assets or claims, shall preserve,
and aid in preserving, such books, documents, records, assets and claims and shall, without
prejudice to any other liability that he may incur, be jointly and severally liable for any loss or
damage.]
(4) Every person who is, or becomes, indebted in any manner to a company 2[,firm] or
person in respect of which or whom a declaration under sub-section (1) of section 43B has been
made shall, during the period between the date on which such declaration is published and the
date on which an order for winding up or, as the case may be, an order of adjudication is made by
the Court, repay the amount of the debt by depositing it in the manner provided for in sub-section
(1) and inform the State Bank in writing of his having done so.
(5) In computing the period prescribed by the Limitation Act, 1908 (IX of 1908), for any
suit, appeal or application in respect of anything arising from actions which, immediately before
the commencement of the Banking Companies (Amendment) Ordinance, 1979, were pending
against a company or person in respect of which or whom a declaration under sub-section (1) of
section 43B has been made, or in respect of any action to the filing of which the company or
person may be entitled, the period commencing on the publication of such declaration and ending
on the day on which an order for winding up or, as the case may be, an order of adjudication is
made by the Court shall be excluded.
3
[43E. Statement of assets and liabilities to be submitted to State Bank.—Within
three days of the publication of a declaration under sub-section (1) of section 43B in respect of a
company, firm or other person or within such further time as the State Bank may, by order in
writing, allow, the chief executive, by whatever name called, and every director, manager,
officer, and agent of the company, and every partner of the firm and the manager, officer and
agent of the firm or such person, and every other person having a claim or liability against or
towards the company, firm or such person shall submit to the State Bank a statement showing the
assets and liabilities of the company, firm or such person so far as may be known to him.]
43F. Consequential provisions for winding up, etc.—(1) Where the declaration made
under sub-section (1) of section 43B is in respect of a person other than an individual or a
company, such person shall, irrespective of the number of members of which it consists,
1
Subs. by the Finance Act, 1990 (7 of 1990, s. 4A, for sub-section (3).
2
Ins. by the Finance Act, 1990 (7 of 1990), s. 4A.
3
Subs. by the Finance Act, 1990 (7 of 1990), s. 4A, for section 43E.
Page 70 of 108
be deemed to be an unregistered company which may be wound up under Part IX of the
1
[Companies Ordinance, 1984 (XLVII of 1984)].
(2) Where the person in respect of which a declaration has been made under sub-section
(1) of section 43B is a company or an unregistered company, the High Court shall, upon an
application made by the State Bank within seven days of the publication of the declaration in
pursuance of sub-section (2) of Section 43B, or within such further time as the Federal
Government may allow, make an order for the winding up of the company or the unregistered
company.
(3) The provisions of Part III, other than those of sections 45 to 49 and 59, and Part IV
shall, in so far as they relate to winding up of a banking company, apply to an application made
under sub-section (2) and to the winding up proceedings following such application.
(4) Notwithstanding anything contained in the Provincial Insolvency Act, 1920 (V of
1920), and the Insolvency (Karachi Division) Act (III of 1909), a declaration made under sub-
section (1) of section 43B in respect of an individual shall constitute an effective ground for
adjudging the individual an insolvent and the court competent to adjudge him an insolvent shall,
upon an application made by the State Bank within seven days of the publication of the
declaration in pursuance of sub-section (2) of section 43B, or such further time as the Federal
Government may allow, pass an order of adjudication against such individual without further
proof and follow thereafter the provisions of the Provincial Insolvency Act, 1920 (V of 1920) or,
as the case may be, the Insolvency (Karachi Division) Act (III of 1909), for the administration
and distribution of the property of the insolvent:
Provided that the court shall not have the power to subsequently annul the adjudication or
accept any composition or scheme or arrangement.]
___________
PART III
SUSPENSION OF BUSINESS AND WINDING UP OF BANKING COMPANIES
44. High Court defined.—In this Part and in Part IV “High Court”, in relation to a
banking company, means the High Court exercising jurisdiction in the place where the registered
office of the banking company is situated or, in the case of a banking company incorporated
outside Pakistan, where its principal place of business in Pakistan is situated.
2
[45. Restriction on stay order.__ (1) The High Court may, on the application of a
banking company which is temporarily unable to meet its obligations, make an order staying for
a fixed period on such terms and conditions as it may think fit the commencement or continuance
of all proceedings against the company and may from time to time extend the period, so that the
total period shall not exceed six months:
Provided that no order of stay shall be granted by the High Court upon such application
of a banking company unless it is accompanied by a report of the State Bank showing that in the
opinion of the State Bank the banking company will be able to pay its debts if the application is
granted.
(2) The registrar of the concerned High Court shall forward a copy of every stay
order to the State Bank of Pakistan, made under sub-section (1) of this Section.
1
Subs. by Finance Act, 2007 (Act No. IV of 2007), s.4, (w.e.f. 01-07-2007).
2
Subs. by Act No. XXIX of 2024, s.27.
Page 71 of 108
(3) When an application is made under sub-section (1), the High Court may appoint such
a special officer of the banking company as recommended by the State Bank, who shall forthwith
take into his custody or under his control all the assets, books, documents, effects and actionable
claims to which the banking company is or appears to be entitled and shall also exercise such
other powers as the High Court may deem fit to confer on him, having regard to the interests of
the depositors of the banking company:
Provided that a special officer appointed under this sub-section shall carry out his
functions under the direction and supervision of the State Bank, which direction and supervision
shall be in accordance with the powers conferred on him by the High Court.
(4) Where the State Bank is satisfied that the affairs of a banking company in respect of
which an order under sub-section (1) has been made, are being conducted in a manner
detrimental to the stability of the financial system in Pakistan or the interests of the depositors, it
may take a decision under section 42D and exercise any one or more of the Resolution powers
provided under section 42E or make an application to the High Court for the winding up of the
company, and where any such application is made, the High Court shall not make any order
extending the period for which the commencement or continuance of all actions and proceedings
against the company were stayed under that sub-section.
(5) The special officer appointed by the High Court under sub-section (3) of this section
shall continue to hold office until he is removed from office, or until the bank resumes business,
or until a liquidator is duly appointed to wind up the business of the bank.]
46. Restriction on compromise or arrangement between banking companies and
creditors.— (1)Notwithstanding anything contained in any law for the time being in force, no
High Court shall sanction a compromise or arrangement between a banking company and its
creditors or any class of them or between such company and its members or any class of them
unless the compromise or arrangement is certified by the State Bank in writing as not being
incapable of being worked and as not being detrimental to the interests of the depositors of such
banking company.
1
[(2) Notwithstanding anything contained in section 279 of the Companies Act, 2017
(XIX of 2017), where an application is made in respect of a compromise or arrangement between
a banking company and its creditors or any class of them or between such company and its
members or any class of them before a High Court, the High Court may direct the State Bank to
make an inquiry in relation to the affairs of the banking company and the conduct of its directors
and when such a direction is given, the State Bank shall make such inquiry and submit its report
to the High Court.]
1
[47. [* * * * * * *]
48. Procedure for amalgamation of banking companies.— (1) Notwithstanding
anything contained in any law for the time being in force, no banking company shall be
amalgamated with another banking company, unless a scheme containing the terms of such
amalgamation has been placed in draft before the shareholders of each of the banking companies
concerned separately, and approved by a resolution passed by a majority in number representing
two thirds in value of the shareholders of each of the said companies, present either in person or
by proxy at a meeting called for the purpose.
1
Subs., and omitted by Act No. XXIX of 2024, ss.28-29.
Page 72 of 108
(2) Notice of every such meeting as is referred to in sub-section (1) shall be given to
every shareholder of each of the banking companies concerned in accordance with the relevant
articles of association, indicating the time, place and object of the meeting, and shall also be
published at least once a week for three consecutive weeks in not less than two newspapers
which circulate in the locality or localities where the registered offices of the banking companies
concerned are situated, one of such newspapers being in a language commonly understood in the
locality or localities.
(3) Any shareholder, who has voted against the scheme, of amalgamation at the meeting
or has given notice in writing at or prior to the meeting to the company concerned or the
presiding officer of the meeting that he dissents from the scheme of amalgamation, shall be
entitled, in the event of the scheme being sanctioned by the State Bank to claim from the banking
company concerned, in respect of the shares held by him in that company, their value as
determined by the State Bank when sanctioning the scheme and such determination by the State
Bank as to the value of the shares to be paid to dissenting shareholder shall be final for all
purposes.
(4) If the scheme of amalgamation is approved by the requisite majority of shareholders
in accordance with the provisions of this section, it shall be submitted to the State Bank for
sanction and shall, if sanctioned by the State Bank by an order in writing passed in this behalf be
binding on the banking companies concerned and also on all the shareholders thereof [:]1
1
[Provided that in case of foreign banking companies, notwithstanding the fact that the
scheme of the amalgamation is not approved by the requisite majority of shareholders, such
sanction may be granted by the State Bank upon a certificate issued by their respective head
offices approving the scheme.]
(5) Where a scheme of amalgamation is sanctioned by the State Bank under the
provisions of this section, the State Bank shall transmit a copy of the order sanctioning the
scheme to the registrar before whom the banking companies concerned have been registered and
the registrar shall, on receipt of any such order, strike off the name of the company (hereinafter in
this section referred to as the amalgamated banking company) which by reason of the
amalgamation will cease to function.
(6) On the sanctioning of scheme of amalgamation by the State Bank, the property of the
amalgamated banking company shall, by virtue of the order of sanction, be transferred to and
vest in, and the liabilities of the said company shall, by virtue of the said order be transferred to
and become the liabilities of the banking company which under the scheme of amalgamation is to
acquire the business of the amalgamated banking company, subject in all cases to the terms of the
order sanctioning the scheme.
2
[(7) In this section, “banking company” means any banking company and includes the
National Bank of Pakistan, the Agricultural Development Bank of Pakistan, the Industrial
Development Bank of Pakistan, the House Building Finance Corporation, investment finance
companies, venture capital companies, housing finance companies, leasing companies, 1[branch
of a foreign banking company doing business in Pakistan] and any other financial institution
covered under section 3A.]
1
Subs., added and Ins. by Finance Act, 2007 (Act No. IV of 2007), s.4, (w.e.f. 01-07-2007).
2
Subs. by Ord. CXI of 2002 s.9.
Page 73 of 108
49. Winding up by High Court.— 1[(1) Notwithstanding anything contained in section 279,
section 301 and section 428 of the Companies Act, 2017 (XIX of 2017), but without prejudice to its
powers under the sub-section (1) of section 45 or the State Bank’s powers under section 42E, the High
Court shall order the winding up of a banking company__
(a) if the banking company is unable to pay its debts; or
(b) if an application for its winding up has been made by the State Bank under section
45, this section or section 59.]
(2) 1[* * * * * * *]
(3) The State Bank may make an application under this section for the winding up of a banking
company—
(a) if the banking company—
(i) has failed to comply with the requirements specified in section 13; or
(ii) has by reason of the provisions of section 27 become disentitled to carry
on banking business in Pakistan; or
1
[(iii) has been prohibited from receiving fresh deposits by an order under sub-
section (5) of section 26A; or]
(iv) having failed to comply with any requirement of this Ordinance other than
the requirements laid down in section 13, has continued such failure, or,
having contravened any provision of this Ordinance has continued such
contravention beyond such period or periods as may be specified in that
behalf by the State Bank from time to time, after notice in writing of such
failure or contravention has been conveyed to the banking company; or
1
[(aa) if an order has been made under section 42D and the State Bank has determined
that it is appropriate that the banking company be wound up or part of the assets
and liabilities of the banking company has been transferred to a transferee bank
under section 42G or to a bridge bank under section 42H; or]
(b) if in the opinion of the State Bank—
(i) a compromise or arrangement sanctioned by a Court in respect of the
banking company cannot be worked satisfactorily with or without
modifications; or
(ii) the returns, statements or information furnished to it under or in pursuance
of the provisions of this Ordinance disclose that the banking company is
unable to pay its debts; or
1
[(iii) the continuance of the banking company is prejudicial to the stability
of the financial system in Pakistan or the interest of its depositors.]
1
Subs., omitted and ins. by Act No. XXIX of 2024, s.30.
Page 74 of 108
(4) Without prejudice to the provisions contained in section 1[302 of the Companies Act,
2017 (XIX of 2017)] a banking company shall be deemed to be unable to pay its debts if it has
refused to meet any lawful demand made at any of its offices or branches within two working days,
if such demand is made at a place where there is an office, branch or agency of the State Bank, or,
within five working days, if such demand is made elsewhere, and if the State Bank certifies in
writing that the banking company is unable to pay its debts.
(5) A copy of every application made by the State Bank under sub-section (1) shall be sent
by the State Bank to the registrar.
(6) Notwithstanding anything contained in 1[the Companies Act, 2017 (XIX of 2017)], no
Court shall entertain an application for winding up of banking company by the Court unless such
application is accompanied by a certificate in writing from the State Bank certifying that it has no
objection to the making of such application 1[:]
1
[Provided that notification shall be made to the State Bank of a filing for a winding up or an
order made to that effect in relation to a company that controls or owns a substantial interest in a
banking company or a subsidiary of a company that controls a banking company, or of a banking
company. The official liquidator appointed over such an entity shall be under obligation to avoid any
action that may frustrate the achievement of the objectives provided under section 42B and shall be
under duty to coordinate with the State Bank in this respect.]
50. Court Liquidator.—(1) When, having regard to the number of proceedings for the
winding up of banking companies or the extent of the work involved in such proceedings, in any
Province or at any place in any Province, the 2[Federal Government] is of the opinion that it is
necessary or expedient to attach a court Liquidator to the High Court of that province it may, in
consultation with the State Bank, appoint a Court Liquidator, for the Province or at a place in the
Province, and for such time as the 2[Federal Government] may think fit, for the purpose of
conducting all proceedings for the winding up of banking companies and performing such duties in
reference thereto as the High Court may impose.
(2) Where there is a court liquidator attached to a High Court and an order is passed by the
High Court for the winding up of any banking company, then, notwithstanding anything contained in
section 171A or section l75 of the 3[Companies Ordinance, 1984 (XLVII of 1984)], the court
liquidator shall become the official liquidator of the banking company.
(3) Where there is a court liquidator attached to a High Court and any proceeding, for the
winding up of a banking company in which any person other than the State Bank or the court
liquidator has been appointed as official liquidator, is pending before the High Court immediately
before the commencement of this Ordinance or the date on which the court liquidator is so attached
to the High Court, whichever is later, then, notwithstanding anything contained in section 176 of the
3
[Companies Ordinance, 1984 (XLVII of 1984)], the person appointed as official liquidator shall, on
such commencement or, as the case may be, on the aforesaid date, be deemed to have vacated his
office as such and the vacancy so caused shall be deemed to be filled up by the appointment of the
court liquidator as the official liquidator:
Provided that where the High Court, after giving the court liquidator and the State Bank an
opportunity of being heard, is of opinion that the appointment of the court liquidator would be
detrimental to the interests of the depositors of the banking company, it may direct the person
appointed as the official liquidator to continue to act as such.
1
Subs., and Ins. by Act XXIX of 2024, s.30.
2
Subs. by the Banking Companies (Amdt.) Act, 1972 (30 of 1972), s. 23 (w.e.f. 13-10-1972), for “Central Government”.
3
Sub. by Finance Act, 2007 (Act No. IV of 2007), s.4, (w.e.f. 01-07-2007).
Page 75 of 108
1
[51. State Bank to be official liquidator.__ “(1) Notwithstanding anything contained in
section 50, or in the Companies Act, 2017 (XIX of 2017), where the High Court has ordered the
winding up of a banking company under section 49, the State Bank may apply for an order
appointing the State Bank or any individual as the official liquidator of the banking company in that
proceeding, and the High Court shall grant the application for appointing the State Bank or such
person as specified by the State Bank as liquidator. Where a person specified by the State Bank is
appointed as liquidator, the remuneration of such liquidator shall be determined by the State Bank.
(2) Further, the High Court, on an application made by the State Bank for appointment of
official liquidator, shall appoint such person as liquidator as specified by the State Bank in its
application either to fill a vacancy, or to dismiss and replace a liquidator appointed under sub-section
(1).
(3) Subject to an order of the High Court, a liquidator appointed under sub-section (1) or sub-
section (2) shall carry out its functions under the direction and supervision of the State Bank.
(4) Further, any liquidator appointed under sub-section (1) and sub- section (2), shall have the
power to transfer the assets and liabilities of the banking company to protect the interest of
depositors or maximize the value for all creditors as a whole.]
52. Application of Companies Act to Liquidators.__ (1) All the provisions of 1[the
Companies Act, 2017 (XIX of 2017)], relating to a liquidator, and so far as they are not inconsistent
with this Ordinance, shall apply to or in relation to a liquidator appointed under section 50 or section
51 1[:]
1
[Provided that such a liquidator shall provide any assistance as the Deposit Protection
Corporation may seek for the re-imbursement of protected deposits and its other claims in a timely
manner.]
(2) Any reference to the “official liquidator” in this Part and Part IV shall be construed as
including a reference to any liquidator of a banking company.
53. Stay of proceedings.—Notwithstanding anything to the contrary contained in section
173 of the 2[Companies Ordinance, 1984 (XLVII of 1984)], the High Court shall not make any order
staying the proceedings in relation to the winding up of a banking company, unless the High Court is
satisfied that an arrangement has been made whereby the company can pay its depositors in full as
their claims accrue.
3
[54. Preliminary report by the official liquidator.— Notwithstanding anything to the
contrary contained in section 329 of the Companies Ordinance, 1984 (XLVII of 1984), where a
winding-up order has been made in respect of a banking company, the official liquidator shall submit
a preliminary report to the High Court within ninety days from the date of the winding-up order or
where the winding-up order has been made before the 1st day of August, 2001, within ninety days
therefrom, giving the information required by section 329 ibid so far as it is available to the official
liquidator and also stating the amount of assets of the banking company in cash which are in his
custody or under his control on the date of the report and the amount of its assets which are likely to
be collected in cash before the expiry of that period of ninety days in order that such assets may be
applied speedily towards making priority payments under section 58 and in the discharge, as far as
possible, of the liabilities and obligations of the banking company in accordance with the provisions
of the section 58, and the official liquidator shall make for the purposes aforesaid every endeavour to
collect in cash as much of the assets of the banking company as practicable:
1
Subs., and added by Act No. XXIX of 2024, ss.31-32
2
Sub. by Finance Act, 2007 (Act No. IV of 2007), s.4, (w.e.f. 01-07-2007).
3
Subs. by Ord. 47 of 2001, s. 5.
Page 76 of 108
Provided that the High Court may, if it deems fit in any particular case, extend the period of
ninety days, referred to in this section, for a further period of sixty days.]
55. Notice to preferential claimants and secured and unsecured creditors.__ (1) Within
fifteen days from the date of the winding-up order of a banking company or where the winding-up order
has been made before the commencement of this Ordinance, within one month from such
commencement, the official liquidator shall, for the purpose of making an estimate of the debts and
liabilities of the banking company (other than its liabilities and obligations to its depositors), by notice
served in such manner as the State Bank may direct, call upon—
(a) every claimant entitled to preferential payment under section 230 of the
1
[Companies Ordinance, 1984 (XLVII of 1984)], and
(b) every secured and every unsecured creditor, to send to the official liquidator
within one month from the date of the service of the notice a statement of the
amount claimed by him.
(2) Every notice under sub-section (1) sent to a claimant having a claim under section 230 the
1
[Companies Ordinance, 1984 (XLVII of 1984)], shall state that if a statement of the claim is not sent to
the official liquidator before the expiry of the period of one month from the date of the service, the claim
shall not be treated as a claim entitled to be paid under that section in priority to all other debts but shall
be treated as an ordinary debt due by the banking company.
(3) Every notice under sub-section (1) sent to a secured creditor shall require him to value his
security before the expiry of the period of one month from the date of the service of the notice and shall
state that if a statement of the claim together with the valuation of the security is not sent to the official
liquidator before the expiry of the said period, then the official liquidator shall himself value the security
and such valuation shall be binding on the creditor.
(4) If a claimant fails to comply with the notice sent to him under sub-section (1), his claim will
not be entitled to be paid under section 230 of the 1[Companies Ordinance, 1984 (XLVII of 1984)], in
priority to all other debts but shall be treated as an ordinary debt due by the banking company; and if a
secured creditor fails to comply with the notice sent to him under sub-section (1), the official liquidator
shall himself value the security and such valuation shall be binding on the creditor.
56. Power to dispense with meetings of creditors, etc.— Notwithstanding anything to the
contrary contained in sections 178A and 183 of the 1[Companies Ordinance, 1984 (XLVII of 1984)], the
High Court may, in the proceedings for winding-up a banking company, dispense with any meetings of
creditors or contributories or with the appointment of a committee of inspection if it considers that no
object will be secured thereby sufficient to justify the delay and expense.
57. Booked depositors’ credits to be deemed proved.— In any proceeding for the winding-up
of a banking company, every depositor of the banking company shall be deemed to have filed his claim
for the amount shown in the books of the banking company as standing to his credit and notwithstanding
anything to the contrary contained in section 191 of the 1[Companies Ordinance, 1984 (XLVII of 1984)],
the High Court shall presume such claim to have been proved, unless the official liquidator shows that
there is reason for doubting its correctness.
2
[58. Priority payments to depositors.— (1) In every proceeding for winding-up of a banking
company where a winding-up order has been made, within ninety days from the date of the winding-up
order or where the winding-up order has been made before 1st day of August, 2001, within ninety days
therefrom, the payments referred to in sub-section (2) shall be made by the official liquidator or adequate
provision for such payments shall be made by him.
1
Sub. by Finance Act, 2007 (Act No. IV of 2007), s.4, (w.e.f. 01-07-2007).
2
Subs. by Ord. 47 of 01, s. 6.
Page 77 of 108
1
[(2) Subject to sub-section (3), there shall be paid within the period of ninety days as
specified in sub-section (1), in the first place, to each eligible depositor of the banking company, a
sum up to the amount prescribed by the Deposit Protection Corporation under section 7 of the
Deposit Protection Corporation Act, 2016 (XXXVII of 2016) or the balance at his credit whichever
is less and any other liabilities owed to the Deposit Protection Corporation under sub-sections (1)
and (2) of section 22 of the Deposit Protection Corporation Act, 2016 (XXXVII of 2016).
(3) The total amount paid to each eligible depositor under sub-section (2) shall not exceed the
amount prescribed by the Corporation under section 7 of the Deposit Protection Corporation Act,
2016 (XXXVII of 2016)__
(i) where a depositor is maintaining more than one deposit account with a
banking company; and
(ii) in the case of joint account holders of a deposit account.]
(4) Where within the period of ninety days as specified in sub-section (1), full payments
cannot be made of the amounts required to be paid under sub-section (2) with the assets in cash, the
official liquidator shall pay within that period to every 1[eligible] depositor on a pro rata basis so
much of the amount due to every 1[eligible] depositor as the official liquidator is able to pay with
those assets, and shall pay the rest of that amount to every 1[eligible] depositor as and when
sufficient assets are collected by the official liquidator in cash.
(5) After payments have been made first to depositors in accordance with the foregoing
provisions, the remaining assets of the banking company available for payment shall be utilised
according to the following order of priority, namely:__
(a) firstly, for payment of balance due to depositors in accordance with a scheme
to be prepared by the State Bank;
1
[(aa) after payments have been made to dopositors in accordance with clause (a),
secondly, for payment of Resolution funding support provided by the Federal
Government under sub-section (1) of section 42I;]
1
[(b) after payments have been made in accordance with clause (a) and (aa), thirdly,
for payment on a pro rata basis to every claimant entitled to preferential
payment under section 390 of the Companies Act, 2017 (XIX of 2017) or any
other law for the time being in force;
(c) after payments have been made in full in accordance with clauses (a), (aa) and
(b), fourthly, for payment on a pro rata basis of the debts of the general
creditors;]
1
[(d) after payments have been made in full in accordance with clauses (a), (aa) and
(b) and (c), fifthly, for payment on a pro rata basis of debts owed to sub-
ordinated creditors; and
(e) after payments have been made in full in accordance with clauses (a), (aa), (b),
(c) and (d), finally, for payment on a pro rata basis of equity to shareholders.]
1
Subs., Ins. and added by Act XXIX of 2024, s.33.
Page 78 of 108
(6) For the purposes of this section, banking companies, financial institutions specified in
1
[section 3A and financial institutions as defined in clause 31 of sub-section (1) of section 2 of the
Companies Act, 2017 (XIX of 2017)] shall be treated as general creditors and not depositors.
(7) Subject to sub-section (8), in order to enable the official liquidator to have in his custody
or under his control in cash as much of the assets of a banking company as possible, the securities
given to every secured creditor may be redeemed by the official liquidator—
(a) where the amount due to a creditor is more than the value of the securities as
assessed by him or, as the case may be, as assessed by the official liquidator,
on payment of such value; and
(b) where the amount due to the creditor is equal to or less than the value of the
securities as so assessed, on payment of the amount due.
(8) Where the official liquidator is not satisfied with the valuation made by the creditor, he
may apply to the High Court for making a valuation.
(9) When any depositor, claimant or creditor to whom any payment is to be made in
accordance with the foregoing provisions, cannot be found or is not readily traceable, adequate
measures shall be taken by the official liquidator for such payment.
(10) For the purposes of this section, the payments specified in each of the following clauses
shall be treated as payments of a different class, namely:—
(a) payments to depositors 1[and the Deposit Protection Corporation]pursuant to
sub-sections (2) and (4);
(b) payments to depositors pursuant to clause (a) of sub-section (5);
1
[(bb) payments to Federal Government pursuant to clause (aa) of sub-section (5);]
(c) payments to preferential claimants pursuant to clause (b) of sub-section (5);
1
[*]
(d) payments to the general creditors pursuant to clause (c) of sub-section (5).
1
[(e) payments to the sub-ordinated creditors pursuant to clause (d) of sub-section
(5); and
(f) payments to the shareholders pursuant to clause (e) of sub-section (5).]
(11) The payments to persons in each different class specified in sub-section (10) shall rank
equally among themselves and be paid in full unless the assets are insufficient to meet them, in
which case they shall abate in equal proportion 1[:]]
1
[Provided that in the application of clause (e) of sub-section (10), sub-classes can be created
based on the contractual terms contemplating payments to be made to some sub-ordinated creditors
after such other creditors.]
1
Subs., Added, Ins. and omitted by Act No. XXIX of 2024, s.33.
Page 79 of 108
1
[(12) The provisions of this section shall also apply to a banking company under winding up
that is not a member of the Deposit Protection Corporation and in its application to such a banking
company, shall have effect as if the word “eligible” has been omitted from sub-sections (2), (3) and
(4).]
59. Restriction on voluntary winding up.— Notwithstanding anything to the contrary
contained in section 1[347 of the Companies Act, 2017 (XIX of 2017)], no banking company which
holds a licence granted under section 27 may be voluntarily wound up unless the State Bank certifies
in writing that the company is able to pay in full all its debts to its creditors as they accrue, and
without prejudice to the provisions contained in sections 1[379 and 380] of that Act, the High Court
shall, on application of the State Bank, order the winding up of the company by the High Court if at
any stage during the voluntary winding up proceedings the company is not able to meet such debts as
they accrue.
_______
PART IV
SPECIAL PROVISIONS FOR SPEEDY DISPOSAL OF WINDING UP PROCEEDINGS
60. Part IV to override other Laws.— The provisions of this Part and the rules made
thereunder shall have effect notwithstanding anything inconsistent therewith contained in the
2
[Companies Ordinance, 1984 (XLVII of 1984)], or the code of Civil Procedure, 1908 (Act V of
1908), or the Code of Criminal Procedure, 1898 (Act V of 1898), or any other law for the time being
in force or any instrument having effect by virtue of any such law; but the provisions of any such law
or instrument in so far as the same are not varied by, or inconsistent with, the provisions of this Part
or rules made thereunder shall apply to all proceedings under this Part.
61. Power of High Court to decide all claims in respect of banking companies.— The
High Court shall, save as otherwise expressly provided in section 62, have exclusive jurisdiction to
entertain and decide any claim made by or against a banking company which is being wound up
(including claims by or against any of its branches in Pakistan) or any application made under
section 153 of the 2[Companies Ordinance, 1984 (XLVII of 1984)], by or in respect of a banking
company or any question of priorities or any other question whatsoever, whether of law or fact,
which may relate to or arise in the course of the winding up of a banking company, whether such
claim or question has arisen or arises or such application has been made or is made before or after
the date of the order for the winding up of the banking company or before or after the
commencement of this Ordinance.
62. Transfer of pending proceedings.— (1) Where a winding up order is made or has been
made in respect of a banking company, no suit or other legal proceedings, whether civil or criminal,
in respect of which the High Court has jurisdiction under this Ordinance and which is pending in any
other court immediately before the commencement of this Ordinance or the date of the order for the
winding up of the banking company, whichever is later, shall be proceeded with except in the
manner hereinafter provided.
(2) The official liquidator shall, within three months from the date of the winding up order or
the commencement of this Ordinance whichever is later or such further time as the High Court may
allow, submit to the High Court a report containing a list of all such pending proceedings together
with particulars thereof.
1
Ins., and Subs. by Act No. XXIX of 2024, ss.33-34.
2
Sub. by Finance Act, 2007 (Act No. IV of 2007), s.4, (w.e.f. 01-07-2007).
Page 80 of 108
(3) On receipt of a report under sub-section (2), the High Court may, if it so thinks fit, give
the parties concerned an opportunity to show cause why the proceedings should not be transferred to
itself and after making an inquiry in such manner as may be provided by rules made under section
79, it shall make such order as it deems fit transferring to itself all or such of the pending proceedings
as may be specified in the order and such proceedings shall thereafter be disposed of by the High
Court.
(4) If any proceeding pending in a court is not so transferred to the High Court under sub-
section (3), such proceeding shall be continued in the court in which the proceeding was pending.
(5) Nothing in this section shall apply to any proceeding pending in appeal before the
Supreme Court or a High Court.
63. Settlement of list of debtors.— (1) Notwithstanding anything to the contrary contained
in any law for the time being in force, the High Court may settle in the manner hereinafter provided a
list of debtors of a banking company which is being wound up.
(2) Subject to any rules that may be made under section 92, the official liquidator shall,
within six months from the date of the winding up order or the commencement of this Ordinance,
whichever is later, from time to time, file to the High Court lists of debtors containing such
particulars as are specified in the Third Schedule:
Provided that such lists may, with the leave of the High Court, be filed after the expiry of the
said period of six months.
(3) On receipt of any list under sub-section (2), the High Court shall, wherever necessary,
cause notices to be issued on all persons affected and after making an inquiry in such manner as may
be provided by rules made under section 79, it shall make an order settling the list of debtors:
Provided that nothing in this section shall debar the High Court from settling any such list in
part as against such of the persons whose debts have been settled without settling the debts of all the
persons placed on the list.
(4) At the time of the settlement of any such list, the High Court shall pass an order for the
payment of the amount due by each debtor and make such further orders as may be necessary in
respect of the relief claimed, including reliefs against any guarantor or in respect of the realisation of
any security.
(5) Every such order shall, subject to the provisions for appeal, be final and binding for all
purposes as between the banking company on the one hand and the person against whom the order is
passed and all persons claiming through or under him on the other hand, and shall be deemed to be a
decree in a suit.
(6) In respect of every such order, the High Court shall issue a certificate specifying clearly
the reliefs granted and names and descriptions of the parties against whom such reliefs have been
granted, the amount of costs awarded and by whom, and out of what funds and in what proportions,
such costs are to be paid; and every such certificate shall be deemed to be a certified copy of the
decree for all purposes including execution.
(7) At the time of settling the list of debtors or at any other time prior or subsequent thereto,
the High Court shall have power to pass any order in respect of a debtor on the application of the
official liquidator for the realisation, management, protection, preservation or sale of any property
given as security to the banking company and to give such powers to the official liquidator to carry
out the aforesaid directions as the High Court thinks fit.
Page 81 of 108
(8) The High Court shall have power to sanction a compromise in respect of any debt and to
order the payment of any debt by installments.
(9) In any case in which any such lists, settled exparte as against any person, such person
may, within thirty days from the date of the order settling the list, apply to the High Court for an
order to vary such list, so far as it concerns him, and if the High Court is satisfied that he was
prevented by any sufficient cause from appearing on the date fixed for the settlement of such list and
that he has a good defence to the claim of the banking company on merits, the High Court may vary
the list and pass such orders in relation thereto as it thinks fit:
Provided that the High Court may, if it so thinks fit, entertain the application after the expiry
of the said period of thirty days.
(10) Nothing in this section shall—
(a) apply to debt which has been secured by a mortgage of immovable property, if
a third party has any interest in such immovable property; or
(b) prejudice the rights of the official liquidator to recover any debt due to a
banking company under any other law for the being in force.
64. Special provisions to make calls on contributories.— Notwithstanding that the list of
contributories has not been settled under section 184, of the 1[Companies Ordinance, 1984 (XLVII of
1984)], the High Court may, if it appears to it necessary or expedient so to do, at any time after making a
winding up order, make a call on and order payment thereof by any contributory under sub-section (1) of
section 187 of the 1[Companies Ordinance, 1984 (XLVII of 1984)], if such contributory has been placed
on the list of contributories by the official liquidator and has not appeared to dispute his liability.
65. Documents of banking company to be evidence.— (1) Entries in the books of account or
other documents of a banking company which is being wound up shall be admitted in evidence in all
proceedings by or against the banking company; and all such entries may be proved either by the
production of the books of account or other documents of the banking company containing such entries
or by the production of a copy of the entries, certified by the official liquidator under his signature and
stating that it is a true copy of the original entries and that such original entries are contained in the books
of account or other documents of the banking company in his possession.
(2) Notwithstanding anything to the contrary contained in the Evidence Act, 1872, all such
entries in the books of account or other documents of a banking company shall as against the directors of
the banking company in respect of which the winding up order has been made before the commencement
of this Ordinance, be prima facie evidence of the truth of all matters purporting to be therein recorded.
66. Public examination of directors and auditors.— (1) Where an order has been made for
the winding up of a banking company, the official liquidator shall submit a report whether in his
opinion any loss has been caused to the banking company since its formation by any act or omission
(whether or not a fraud has been committed by such act or omission) of any person in the promotion
or formation of the banking company or of any director or auditor of the banking company.
(2) If, on consideration of the report submitted under sub-section (1), the High Court is of
opinion that any person who has taken part in the promotion or formation of the banking company or
has been a director or an auditor of the banking company should be publicly examined, it shall hold a
public sitting on a date to be appointed for that purpose and direct that such person, director or
auditor shall attend thereat and shall be publicly examined as to the promotion or formation or the
conduct of the business of the banking company, or as to his conduct and dealings, in so far as they
relate to the affairs of the banking company:
1
Sub. by Finance Act, 2007 (Act No. IV of 2007), s.4, (w.e.f. 01-07-2007).
Page 82 of 108
Provided that no such person shall be publicly examined unless he has been given an opportunity to
show cause why he should not be so examined.
(3) The official liquidator shall take part in the examination and for that purpose may, if
specially authorized by the High Court in that behalf, employ such legal assistance as may be
sanctioned by the High Court.
(4) Any creditor or contributory may also take part in the examination either personally or by
any person entitled to appear before the High Court.
(5) The High Court may put such questions to the person examined as it thinks fit.
(6) The person examined shall be examined on oath and shall answer all such questions as
the High Court may put or allow to be put to him.
(7) A person ordered to be examined under this section may, at his own cost, employ any
person entitled to appear before the High Court who shall be at liberty to put to him such questions
as the High Court may deem just for the purpose of enabling him to explain or qualify any answer
given by him:
Provided that if he is, in the opinion of the High Court, exculpated from any charges made or
suggested against him, the High Court may allow him such costs in its discretion as it may deem fit.
(8) Notes of the examination shall be taken down in writing, and shall be read over to or by,
and signed by, the person examined and may thereafter be used in evidence against him in any
proceeding, civil or criminal, and shall be open to the inspection of any creditor or contributory at all
reasonable times.
(9) Where on such examination, the High Court is of opinion (whether a fraud has been
committed or not)—
(a) that a person who has been a director of the banking company is not fit to be a
director of a company, or
(b) that a person who has been an auditor of the banking company or a partner of
a firm acting as such auditor is not fit to act as an auditor of a company or to
be a partner of a firm acting as such auditor,
the High Court may make an order that that person shall not, without the leave of the High Court, be
a director of, or in any way, whether directly or indirectly, be concerned or take part in the
management of any company or, as the case may be, act as an auditor of, or be a partner of a firm
acting as auditors of, any company for such period not exceeding five years as may be specified in
the order.
67. Special provisions for assessing damages against delinquent directors, etc.—(1)
Where an application is made to the High Court under section 235 of the 1[Companies Ordinance,
1984 (XLVII of 1984)], against any promoter, director, manager, liquidator or officer of a banking
company for repayment or restoration of any money or property and the applicant makes out a prima
facie case against such person, the High Court shall make an order against such person to repay and
restore the money or property unless he proves that he is not liable to make the repayment or
restoration either wholly or in part:
1
Sub. by Finance Act, 2007 (Act No. IV of 2007), s.4, (w.e.f. 01-07-2007).
Page 83 of 108
Provided that where such an order is made jointly against two or more such persons, they shall be
jointly and severally liable to make the repayment or restoration of the money or property.
(2) Where an application is made to the High Court under section 235 of the 1[Companies
Ordinance, 1984 (XLVII of 1984)], and the High Court has reason to believe that a property belongs
to any promoter, director, manager, liquidator or officer of the banking company, whether the
property stands in the name of such person or of any other person as the ostensible owner, the High
Court may, at any time, whether before or after making an order under sub-section (1), direct the
attachment of such property or of such portion thereof as the High Court may think fit, and when the
property so attached stands in the name of an ostensible owner, it shall remain subject to attachment
unless the ostensible owner can prove to the satisfaction of the High Court that he is the real owner
and the provisions of the Code of Civil Procedure, 1908 (Act V of 1908), relating to attachment of
property shall, as far as may be, apply to such attachment.
2
[(3) For the purposes of this section and section 70 of this Ordinance and section 235 of the
1
[Companies Ordinance, 1984 (XLVII of 1984)], “property” includes property transferred or
otherwise disposed of by the person referred to in sub-section (1) or any other person as ostensible
owner of such property within two years preceding the commencement of proceedings under section
235 of the 1[Companies Ordinance, 1984 (XLVII of 1984)], or during the currency of such
proceedings, if the High Court is satisfied by affidavit or otherwise that the transfer was otherwise
than in good faith and for sufficient consideration.]
68. Duty of directors and officers of banking company to assist in the realisation of
property.—Every director or other officer of a banking company which is being wound up shall
give such assistance to the official liquidator as he may reasonably require in connection with the
realisation and distribution of the property of the banking company.
69. Special provisions for punishing offences in relation to banking companies being
wound up.— (1) The High Court may, if it thinks fit, take cognizance of and try in a summary way
any offence punishable under this Ordinance or under the 1[Companies Ordinance, 1984 (XLVII of
1984)], alleged to have been committed by any person who has taken part in the promotion or
formation of the banking company which is being wound up or by any director, manager or officer
thereof.
(2) When trying any such offence as aforesaid, the High Court may also try any other
offence not referred to in sub-section (1) which is an offence with which the accused may, under the
Code of Criminal Procedure, 1898 (Act V of 1898), be charged at the same trial.
(3) In any case tried summarily under sub-section (1), the High Court—
(a) need not summon any witness, if it is satisfied that the evidence of such
witness will not be material;
(b) shall not be bound to adjourn a trial for any purpose unless such adjournment
is, in the opinion of the High Court, necessary in the interest of justice;
_________________________________________________________________________________________________________________________
1
Subs. by Finance Act, 2007 (Act No. IV of 2007), s.4, (w.e.f. 01-07-2007).
2
Sub-section (3) added by the Banking Companies (Amdt.) Act, 1972 (30 of 1972), s. 15 (w.e.f. 13-10-1972).
Page 84 of 108
(c) shall, before passing any sentence, record judgement embodying the substance
of the evidence and also the particulars specified in section 263 of the Code of
Criminal Procedure, 1898 (Act V of 1898), so far as that section may be
applicable;
and nothing contained in sub-section (2) of section 262 of the Code of Criminal Procedure, 1898
(Act V of 1898), shall apply to any such trial.
(4) All offences in relation to winding up alleged to have been committed by any person
specified in sub-section (1) which are punishable under this Ordinance or under the 1[Companies
Ordinance, 1984 (XLVII of 1984)], and which are not tried in a summary way under sub-section (1)
shall, notwithstanding anything to the contrary contained in that Act or the Code of Criminal
Procedure, 1898 (Act V of 1898), or in any other law for the time being in force, be taken cognizance
of and tried by a Judge of the High Court other than the Judge for the time being dealing with the
proceeding for the winding up of the banking company.
(5) Notwithstanding anything to the contrary contained in the Code of Criminal Procedure,
1898 (Act V of 1898), the High Court may take cognizance of any offence under this section without
the accused being committed to it for trial and all such trials shall be without the aid of a jury.
70. Public examination of directors and auditors etc., in respect of a banking company
under scheme of arrangement.— (1) Where an application for sanctioning a compromise or
arrangement in respect of a banking company is made under section 153 of the 1[Companies
Ordinance, 1984 (XLVII of 1984)], or where such sanction has been given and the High Court is of
opinion, whether on a report of the State Bank or otherwise, that any person who has taken part in
the promotion or formation of that banking company or has been a director or auditor thereof should
be publicly examined, it may direct such examination of such person and the provisions of section 66
shall, as far as may be, apply to such banking company as they apply to a banking company which is
being wound up.
(2) Where a compromise or arrangement is sanctioned under section 153 of the 1[Companies
Ordinance, 1984 (XLVII of 1984)], in respect of a banking company, the provisions of section 235
of that Act and of section 67 shall, as far as may be, apply to such banking company as they apply to
a banking company which is being wound up as if the order sanctioning the compromise or
arrangement were an order for the winding up of that banking company.
(3) Where a scheme of reconstruction or amalgamation of a banking company has been
sanctioned by the 2[Federal Government] under section 47 and the 2[Federal Government] is of
opinion that any person who has taken part in the promotion or formation of that banking company
or has been a director or auditor thereof should be publicly examined, that Government may apply to
the High Court for the examination of such person and if on such examination the High Court finds
(whether a fraud has been committed or not) that that person is not fit to be a director of a company
or to act as an auditor of a company or to be a partner of a firm acting as such auditors, the 2[Federal
Government] shall make an order that that person shall not, without the leave of the 2[Federal
Government], be a director of , or in any way, whether directly or indirectly, be concerned or take
part in the management of any company or, as the case may be, act as an auditor of, or be a partner
of a firm acting as auditors of, any company for such period not exceeding five years as may be
specified in the order.
1
Sub. by Finance Act, 2007 (Act No. IV of 2007), s.4, (w.e.f. 01-07-2007).
2
Subs. by the Banking Companies (Amdt.) Act, 1972 (30 of 1972), s. 23 (w.e.f. 13-10-1972), for “Central Government”.
Page 85 of 108
(4) Where a scheme of reconstruction or amalgamation of a banking company has been
sanctioned by the 1[Federal Government] under section 47, the provision of section 235 of the
2
[Companies Ordinance, 1984 (XLVII of 1984)], and those of section 67 shall, as far as may be,
apply to the banking company as they apply to a banking company which is being wound up as if the
order sanctioning the scheme of reconstruction or amalgamation, as the case may be, were an order
for the winding-up of the banking company; and any reference in the said section 235 to the
application of the official liquidator shall be construed as a reference to the application of the
1
[Federal Government.]
3
[(5) The provisions of sub-sections (3) and (4) shall apply to a banking company in respect
of which a scheme of amalgamation has been sanctioned by the State Bank under section 48, and in
their application to such a banking company shall have effect as if—
(a) the word “reconstruction or” wherever occurring were omitted; and
(b) for the words 4[Federal Government] wherever occurring the words “State
Bank” were substituted.
(6) The provisions of sub-sections (3) and (4) shall apply to a banking company other than a
banking company in relation to which provision has been made in the preceding sub-sections and, in
their application to such a banking company, shall have effect as if—
(a) in sub-section (3),—
(i) for the words and figure “where a scheme of reconstruction or
amalgamation of a banking company has been sanctioned by the
4
[Federal Government] under section 47 and” the word “If” were
substituted; and
(ii) for the words 4[Federal Government] wherever occurring the words
“State Bank” were substituted; and
(b) in sub-section (4),—
(i) the words, figure and comma “Where a scheme of reconstruction or
amalgamation of a banking company has been sanctioned by the
4
[Federal Government] under Section 47,” were omitted;
(ii) for the words and commas “order sanctioning the scheme of
reconstruction or amalgamation, as the case may be,” the words and
figure “making of the application by the State Bank under the said
section 235” were substituted; and
(iii) for the words 4[Federal Government] twice occurring the words “State
Bank” were substituted.]
71. Special provisions for banking companies working under schemes of arrangement
at the commencement of the Ordinance.— Where any compromise or arrangement sanctioned in
respect of a banking company under section 153 of the 2[Companies Ordinance, 1984 (XLVII of
1
Subs. by the Banking Companies (Amdt.) Act, 1972 (30 of 1972), s. 23 (w.e.f. 13-10-1972), for “Central Government”.
2
Sub. by Finance Act, 2007 (Act No. IV of 2007), s.4, (w.e.f. 01-07-2007).
3
Sub-section (5) and (6) added by the Banking Companies (Amdt.) Act, 1972 (30 of 1972), s. 16 (w.e.f. 13-10-1972).
4
Subs. by F.A.O. 1975, Art. 2 and Table, for “Central Government” (w.e.f. 28-7-1975).
Page 86 of 108
1984)], is being worked at the commencement of this Ordinance, the High Court may, if it so thinks
fit, on the application of such banking company—
(a) excuse any delay in carrying out any of the provisions of the compromise or
arrangement; or
(b) allow the banking company to settle the list of its debtors in accordance with
the provisions of section 63 and in such a case, the provisions of the said
section shall, as far as may be, apply to the banking company as they apply to
a banking company which is being wound up as if the order sanctioning the
compromise or arrangement were an order for the winding up of the banking
company.
72. Appeals.— (1) An appeal shall lie from any order or decision of the High Court in a civil
proceeding under this Ordinance when the amount or value of the subject-matter of the claim
exceeds five thousand rupees.
(2) The High Court may by rules provide for an appeal against any order made under section
69 and the conditions subject to which any such appeal would lie.
(3) Subject to the provisions of sub-section (1) and sub-section (2) and notwithstanding
anything contained in any other law for the time being in force, every order or decision of the High
Court shall be final and binding for all purposes as between the banking company on the one hand,
and all persons who are parties thereto and all persons claiming through or under them or any of
them, on the other hand.
73. Special period of limitation.— (1) Notwithstanding anything to the contrary
contained in the Limitation Act, 1908 (IX of 1908), or in any other law for the time being in force, in
computing the period of limitation prescribed for a suit or application by a banking company which
is being wound up, the period commencing from the date of the presentation of the petition for the
winding up of the banking company shall be excluded.
(2) Notwithstanding anything to the contrary contained in the Limitation Act, 1908 (IX of
1908), or section 235 of the 1[Companies Ordinance, 1984 (XLVII of 1984)], or in any other law for
the time being in force, there shall be no period of limitation for the recovery of arrears of calls from
any director of a banking company which is being wound up or for the enforcement by the banking
company against any of its directors of any claim based on a contract, express or implied; and in
respect of all other claims by the banking company against its directors, the period of limitation shall
be twelve years from the date of the accrual of such claims or five years from the date of the first
appointment of the liquidator, whichever is longer.
(3) The provisions of this section, in so far as they relate to banking companies being wound
up, shall also apply to a banking company in respect of which a petition for the winding up has been
presented before the commencement of this Ordinance.
74. State Bank to tender advice in winding up proceedings.— where in any proceeding
for the winding up of a banking company in which any person other than the State Bank has been
appointed as the official liquidator and the High Court has directed the official liquidator to obtain
the advice of the State Bank on any matter (which it is hereby empowered to do), it shall be lawful
for the State Bank to examine the record of any such proceeding and tender such advice on the
matter as it may think fit.
1
Subs. by Finance Act, 2007 (Act No. IV of 2007), s.4, (w.e.f. 01-07-2007).
Page 87 of 108
75. Power to inspect.— (1) The State Bank shall, on being directed so to do by the 1[Federal
Government] or by the High Court, cause an inspection to be made one or more of its officers of a
banking company which is being wound up and its books and accounts.
(2) On such inspection, the State Bank shall submit its report to the 1[Federal Government]
and the High Court.
(3) If the 1[Federal Government], on consideration of the report of the State Bank, is of
opinion that there has been a substantial irregularity in the winding up proceedings, it may bring such
irregularity to the notice of the High Court for such action as the High Court may think fit.
(4) On receipt of the report of the State Bank under sub-section (2) or on any irregularity
being brought to its notice by the 1[Federal Government], under sub-section (3) the High Court may,
if it deems fit, after giving notice to and hearing the 1[Federal Government] in regard to the report,
give such directions as it may consider necessary.
76. Power to call for returns and information.— The State Bank may, at any time by
notice in writing, require the liquidator of a banking company to furnish it, within such time as may
be specified in the notice or such further time as the State Bank may allow, any statement or
information relating to or connected with the winding up of the banking company; and it shall be the
duty of every liquidator to comply with such requirements.
Explanation.— For the purpose of this section and section 75, a banking company working
under a compromise or arrangement but prohibited from receiving fresh deposits, shall, as far as may
be, be deemed to be a banking company which is being wound up.
77. District Magistrate to assist official liquidator in taking charge of property of
banking company being wound up.—(1) For the purpose of enabling the official liquidator or the
special officer appointed under sub-section (4) of section 45 to take into his custody or under his
control all property, effect and actionable claims to which a banking company, which has been
ordered to be wound up, is or appears to be entitled, the official liquidator or the special officer as the
case may be, may if he deems it necessary in the interest of speedy liquidation, request in writing the
District Magistrate, within whose jurisdiction any property, books of account or other documents of
such banking company may be situated or be found, to take possession thereof, and the District
Magistrate shall, on such request being made to him, take possession of such property, books of
account or other documents and forward them to the official liquidator or the special officer.
(2) For the purpose of securing compliance with the provisions of sub-section (1), the
District Magistrate may take or cause to be taken such steps and use or cause to be used such force as
may, in his opinion, be necessary.
78. Enforcement of orders and decisions of High Court.— (1) All orders made in any
civil proceeding by a High Court may be enforced in the same manner in which decrees of such court
made in any suit pending therein may be enforced.
(2) Notwithstanding anything to the contrary contained in the Code of Civil Procedure, 1908
(V of 1908), a liquidator may apply for the execution of a decree by a court, other than the one which
made it, on production of a certificate granted under sub-section (6) of section 63 and on his
certifying in writing the amount remaining due or relief remaining unenforced under the decree.
(3) Without prejudice to the provisions of sub-section (1) or sub-section (2), any amount
1
Subs. by the Banking Companies (Amdt.) Act, 1972 (30 of 1972), s. 23 (w.e.f. 13-10-1972), for “Central Government”.
Page 88 of 108
found due to the banking company by an order or decision of the High Court may, with the leave of
the High Court, be recovered in the same manner as an arrears of land revenue.
79. Power of High Court to make rules.— The High Court may make rules consistent with
this Ordinance and the rules made under Section 92 prescribing:
(a) the manner in which inquiries and proceedings under Part III or Part IV may be held;
(b) the offences which may be tried summarily;
(c) the authority to which, and the conditions subject to which, appeals may be preferred
and the manner in which such appeals may be filed and heard; and
(d) any other matter for which provision has to be made for enabling the High Court to
effectively exercise its functions under this Ordinance.
80. References to directors, etc., shall be construed as including references to past
directors, etc.—For the removal of doubts it is hereby declared that any reference in this Part to a
director, manager, liquidator, officer or auditor of a banking company shall be construed as including
a reference to any past or present director, manager, liquidator, officer or auditor of the banking
company.
81. Part II not to apply to banking companies being wound up. Nothing contained in Part
II shall apply to a banking company which is being wound up.
82. Validation of certain proceedings. Notwithstanding anything contained in section 61 or
any other provision of this Part, no proceeding held, judgement delivered or decree or order made
before the commencement of this Ordinance, by any Court other than the High Court in respect of
any matter over which the High Court has jurisdiction under this Ordinance shall be invalid or be
deemed ever to have been invalid merely by reason of the fact that such proceeding, judgement,
decree or order was held, delivered or made by a court other than the High Court.
______
1
[PART IVA
BANKING MOHTASIB
82A. Appointment of Mohtasib.—There shall be a Banking Mohtasib who shall be
appointed by the President in consultation with the Governor of the State Bank of Pakistan.
(2) The Banking Mohtasib shall be a person of high integrity and unimpeachable banking or
legal credentials who is not a share-holder of a banking company or financial institution and is not,
and has not, been a bank defaulter.
(3) The jurisdiction of the Banking Mohtasib in relation to banking transactions shall be to—
(a) enquire into complaints of banking malpractices;
(b) perverse, arbitrary or discriminatory actions;
(c) violations of banking laws, rules, regulations or guidelines;
1
Ins. by Act XIV of 1997, s. 15.
Page 89 of 108
(d) inordinate delays or inefficiency; and
(e) corruption, nepotism or other forms of maladministration.
(4) The Banking Mohtasib shall hold office for a period of three years and shall not be
eligible for any extension of tenure or for re-appointment under any circumstances whatsoever.
(5) The Banking Mohtasib shall not hold any other office of profit in the service of Pakistan
or occupy any other position carrying the right to remuneration for the rendering of services.
82B. Terms and conditions of the Banking Mohtasib.—(1) The Banking Mohtasib shall
be entitled to the same salary and allowances as a Judge of a High Court.
(2) The Banking Mohtasib may be removed from office on the ground that he has been
guilty of misconduct or that he is incapable of properly performing the duties of his office by reason
of physical or mental incapacity.
Provided that he shall have the right to file an appeal before the Federal Services Tribunal.
(3) The Banking Mohtasib shall be provided with a secretariat to be appointed in
consultation with the State Bank. Appointments to the Secretariat may be made on deputation from
the State Bank of Pakistan or other banks or otherwise on the basis of professional qualifications and
the costs of the Secretariat shall be shared by banks in such proportions as may be determined by the
State Bank of Pakistan.
(4) The Banking Mohtasib shall have the power and responsibility—
(a) to entertain complaints from customers, borrowers, banks or from any
concerned body or organization;
(b) to facilitate the amicable resolution of complaints after giving hearings to the
complainant and the concerned bank; 1[*]
1
[(c) to receive evidence on affidavit;
(d) to issue commission for the examination of witnesses; and]
1
[(e)] in the event that complaints cannot be resolved by consent, to give finding
which shall be acted upon in the manner set out herein.
(5) The Banking Mohtasib shall exercise his powers and authority in the following
manner:—
(a) In relation to all banks operating in Pakistan.— The Banking Mohtasib shall
be authorised to entertain complaints of the nature set out herein below:—
(i) failure to act in accordance with banking laws and regulations
including policy directives or guidelines issued by the State bank from
time to time;
Provided that if there is a dispute as to the proper interpretation
of any regulations, directions or guidelines, the same shall be referred
to the State Bank for clarification.
1
Omitted, reletterd, and Ins. by Finance Act, 2007 (Act No. IV of 2007), s.4, (w.e.f. 01-07-2007).
Page 90 of 108
(ii) delays or fraud in relation to the payment or collection of cheques,
drafts or other banking instruments or the transfer of funds;
(iii) fraudulent or unauthorised withdrawals or debit entries in accounts;
(iv) complaints from exporters or importers relating to banking services
and obligations including letter of credits;
(v) complaints from holders of foreign currency accounts, whether
maintained by residents or non-residents;
(vi) complaints relating to remittances to or from abroad;
(vii) complaints relating to mark-up or interest rates based on the ground of
a violation of an agreement or of State Bank directives; and
(viii) complaints relating to the payment of utility bills.
(b) In relation to banks in the public sector.— The Banking Mohtasib shall be
authorized to entertain complaints against such banks on the following
additional grounds as well—
(i) corrupt or malafide practices by bank officers;
(ii) gross dereliction of duty in dealing with customers; and
(iii) inordinate delays in taking decisions1[; and]
1
[(c) The Banking Mohtasib shall not entertain any complaint or application which
has already been disposed of by the State Bank, or any court in Pakistan.]
82C. Reference to Banking Mohtasib by Court.— If at any time during the pendency of a
case, a court trying a case relating to recovery of loan by a banking company is of the opinion that
the management of the banking company has prima facie acted in a malafide manner, or in violation
of banking rules and regulations, it may make reference to the Banking Mohtasib for inquiring into
the matter and passing such order in accordance with the provisions hereof as may deem fit:
Provided that the making of a reference shall not prevent the court from deciding the claim
before it on merits.
82D. Procedure for making complaints.— (1) A complaint shall be made on solemn
affirmation or oath in writing addressed to the Banking Mohtasib. The complaint shall set out the full
particulars of the transaction complained of and the name and address of the complainant.
2
[(2) Prior to making a complaint, the complainant shall request the concerned banking
company to redress the complainant’s grievances and if the banking company either fails to respond
or makes a reply which is un-satisfactory to the complainant within a period of thirty days, the
complainant may file a complaint at any time thereafter within a further period of thirty days:
Provided that the Banking Mohtasib may, if satisfied that there were grounds for the delay in
filing the complaint, condone the delay and entertain the complaint.]
(3) The Banking Mohtasib may adopt any procedure as he considers appropriate for
investigating a complaint:
_________________________________________________________________________________
1
Subs., and Added by Finance Act, 2007 (Act No. IV of 2007), s.4, (w.e.f. 01-07-2007).
2
Subs. by Act No. XXIX of 2024, s.35.
Page 91 of 108
Provided that he shall not pass any order against a bank without first giving it a notice and an
opportunity of a hearing.
(4) Subject to section 82C, the Banking Mohtasib shall not have any power to issue an order
in the nature of a stay order or to entertain any complaints if the matter is pending before a court or
other legal forum.
(5) The Banking Mohtasib may reject a complaint summarily or he may accept the same or
pass any other order he deems fit:
Provided that in each case he shall pass a reasoned order for his decision.
82E. Recommendations for implementation.—(1) In the event the Banking Mohtasib
comes to the conclusion that the complaint is justified, in part or in whole, he shall try and facilitate
an amicable resolution or settlement by resort to mediation and failing that communicate his findings
to the concerned bank with the direction—
(a) to reconsider the matter;
(b) to modify or cancel the earlier decision, action or failure to take the
appropriate action;
(c) to pay reasonable compensation to the complainant as fixed by the Banking
Mohtasib;
(d) to take the requisite steps to improve the functioning or efficiency of the bank;
and
(e) to take such other remedial steps or actions as may be specified by the
Banking Mohtasib.
(2) The Banking Mohtasib may, in any case, he deems fit or proper, forward a report to the
State Bank recommending—
(a) an inquiry, or the taking of the requisite steps or legal proceedings against a
bank which has acted in violation of banking laws, procedure, regulations or
directives of the State Bank; and
(b) in the case of a bank in the public sector in cases of banking malpractices or
corruption, nepotism or gross, and flagrant dereliction by bank officers of their
duties and responsibilities, the initiation of such action including a criminal
prosecution or disciplinary proceedings as the State Bank may deem fit, either
by itself, or through filing a report with the Government of Pakistan.
(3) In no case whatsoever shall be Banking Mohtasib have the power to direct that loans,
advances or finances be given to a complainant.
1
[(4) Any bank, or official of a bank, or a complainant aggrieved by any order passed by the
Banking Mohtasib may, within thirty days of the order, prefer an appeal to the Governor State Bank
who shall decide the appeal within sixty days.]
1
[(5) The findings of Banking Mohtasib shall be implemented by the concerned bank or
financial institution within forty days and compliance thereof shall be submitted accordingly. In case
1
Sub., and Ins. by by Finance Act, 2007 (Act No. IV of 2007), s.4, (w.e.f. 01-07-2007).
Page 92 of 108
an appeal against the decision of the Banking Mohtasib is preferred to the Governor State Bank the
aforesaid period of forty days shall be reckoned from the date of decision of appeal.]
1
[(6)] Any order passed by the Banking Mohtasib which has not been appealed against
1
[within a period of thirty days from the date of order], or any order passed by the State Bank in
appeal, as the case may be, shall become final and operative and if not implemented shall render the
bank concerned to such action including the imposition of a fine or penalty as the State bank may
deem fit, and in relation to a bank officer, to the appropriate disciplinary or other proceedings.
1
[(7)] Nothing contained herein shall prevent a complainant from filing a suit against a bank
in the event his complaint is rejected.
82F. Power to call for information.— The Banking Mohtasib shall have the power
for purposes of disposing a case, to require a bank to disclose to him any information subject to the
following conditions:—
(a) The Banking Mohtasib shall make every endeavour to ensure that banking
confidentiality is maintained as required by banking law and procedure and
shall take no action which is violative there of.
(b) The Banking Mohtasib may call for any or all such documents which are
relevant or pertinent for purposes of deciding a complaint:
Provided that he shall not be entitled to call for unrelated documents or
documents which may compromise the bank‘s position in relation to other
customers :
Provided further that in cases where the Banking Mohtasib is
investigating case of corruption, he shall have a greater latitude in relation to
the inspection of documents.
(c) In the event of a bank refusing to furnish information, or copies of relevant
documents, the Banking Mohtasib shall not be authorised to compel the bank
to comply with his order but he may draw an adverse inference and comment
on the same in his findings.
82G. Report of Banking Mohtasib.—(1) The Banking Mohtasib shall send to the State
Bank of Pakistan on or before the 31st March in every succeeding year a report setting out a review
of the activities of his office during the preceding year.
(2) The Banking Mohtasib shall also submit a report or reports to the State Bank of Pakistan
containing the results of such inquiries as he may be directed to conduct by the State Bank from time
to time.
(3) All reports submitted by the Banking Mohtasib shall be published and released to the
public unless he directs otherwise for reasons to be recorded.]
PART V
MISCELLANEOUS
83. Penalties.— (1) Whoever in any return balance-sheet or other document or in any
information required or furnished by or under or for the purposes of any provision of this Ordinance,
1
Renumberd and Ins. by Finance Act, 2007 (Act No. IV of 2007), s.4, (w.e.f. 01-07-2007).
Page 93 of 108
wilfully makes a statement which is false in any material particular, knowing it to be false, or
wilfully omits to make a material statement, shall be punishable with imprisonment for a term which
may extend to three years and shall also be liable to 1[penalty of an amount as specified in the Fourth
Schedule.]
2
[(1A) If any person, being the chairman, director, chief executive, by whatever name called,
or official liquidator or an officer of a banking company, mismanages the affairs of the banking
company or misuses his position for gaining direct or indirect benefit for himself or any of his family
members, he shall be punishable with imprisonment for a term which may extend to three years and
shall also be liable to 1[penalty of an amount as specified in the Fourth Schedule], and shall be
ordered by the court trying the offence, to deliver up or refund within a time to be fixed by the court
any property acquired or gained by him in his own name or in name of his family members by so
mismanaging the affairs of the banking company or misusing his position or, in default, to suffer
imprisonment for a term which may extend to three years.]
3
[(1AA) Any executive officer, director or chief executive of a banking company which is
either directly or indirectly owned, controlled or managed by the Federal Government or a Provincial
Government who extends, or aids in extending, a loan, advance, or any financial facility to a
borrower or customer on the verbal instructions of a holder of a public office without reducing the
terms of the instructions into writing and drawing them to the attention of his superior officer, or the
board of directors, shall be guilty of an offence punishable with imprisonment of either description
which may extend to one year, or with fine 4[not exceeding the amount of loan, advance or financing
facility so extended], or with both, in addition to such other action which may be taken against him
in accordance with law; and]
5
[(1B) If any company which is not a banking company, or a banking company which does
not hold a licence under section 27 or the licence granted to which has been cancelled, or any
individual or association or body of individuals, transacts the business of banking in Pakistan, the
chief executive, by whatever name called, of the company and every director, manager, and other
officer of the company, and the individual and every member of the association or body of
individuals, shall be deemed to be guilty of such contravention and shall be punishable with
imprisonment of either description for a term which may extend to seven years and with fine the
amount of which shall not be less than twice the amount of deposits received by the company or, as
the case may be, the individual or the association or body of individuals in transacting the business of
banking, and shall be ordered by the Court trying the offence to pay the fine within a time to be fixed
by the Court or in default to suffer further imprisonment for a term which may extend to five years.]
6
[(1C) Whoever contravenes, or attempts to contravene, or abets the contravention of, the
provisions of section 7[27A or section 43A] 7[or obstructs or hinders any person in the exercise of his
powers or discharge of his functions under section 43AA] or section 43C or sub-section (1) or sub-
section (3) or sub-section (4) of section 43D or section 43E shall be punishable with imprisonment of
either description for a term which may extend to five years and with 1[penalty of an amount as
specified in the Fourth Schedule].)]
7
[(1D) If any company, firm or person contravenes the provisions of section 27A, the chief
executive of the company and its directors, every partner of the firm and such person shall be guilty
of an offence punishable with imprisonment of either description for a term which may extend to ten
1
Subs. by Act No. XXIX of 2024, s.36.
2
Sub-section (1A) ins. by the Banking Companies (Amdt) Act, 1972(30 of 1972),s.17(w.e.f 13.10.1972).
3
Ins. by Banking Company (Admt.) Act, 1997 (Act No XIV of 1997), s.16.
4
Ins. by the Finance Act, 2007 (Act No. IV of 2007), s.4 (w.e.f. 01-07-2007).
5
New sub-section (1B) Ins. by the Banking Companies (Admt)Ordinance,1979 (6 of 1979),s.4.
6
New sub-section(1C)ins by the Banking Companies (Amedt) Ordinance,1979.
7
Subs. and Ins. by the Finance Act, 1990 (Act No. VII of 1990), s.4A.
Page 94 of 108
years and with fine the amount of which shall not be less than twice the amount of deposits received in
contravention of the said section and forfeiture of whole or part of the property of such company, firm or
person and the chief executive of the company and its directors, every partner of the firm and person.]
(2) If advances are made by a banking company in contravention of the provisions of sub-section
(1) and (2) of section 24, every director or other officer of the banking company who is knowingly a
party to the contravention shall be punishable with imprisonment which may extend to three years and
with a 1[penalty] 2[which may extend to the amount of loan so extended and with a further 1[penalty of an
amount as specified in the Fourth Schedule.]
(3) If any person fails to produce any book, account or other document or to furnish any
statement or information which under sub-section (4) of section 40 it is his duty to produce or furnish, or
to answer any question relating to the business of a banking company which he is asked by an officer
making an inspection under that section, he shall be punishable with a 1[penalty of an amount as specified
in the Fourth Schedule].
(4) If any deposits are received by a banking company in contravention of an order under 1[sub-
section (5) of section 26A], every director or other officer of the banking company unless he proves that
the contravention took place without his knowledge or that he exercised all due diligence to prevent it,
shall be deemed to be guilty of such contravention and shall be punishable with a fine which may extend
to twice the amount of the deposits so received.
1
[(5) if any other provision of this Ordinance is contravened or circumvented, or if any default is
made in complying with any requirement of this Ordinance or of any order, rule, regulation, instruction,
circular, notification, guideline or direction made or condition imposed thereunder, every person who is
knowingly a party to the contravention or default or circumvention shall be punishable with penalty of an
amount as specified in the Fourth Schedule.]
1
[(5A) where any person recklessly or deliberately engages in any un-safe or un-sound practice,
circumvention of supervisory instructions or deliberate breach of fiduciary duty causing knowingly a
substantial loss to a banking company or a substantial pecuniary gain or other benefit to himself or to any
other person, by reason of regulatory violation or circumvention, deviation from or breach of established
banking practices, such person shall be liable to penalty of an amount as specified in the Fourth Schedule.
(5B) Any person aggrieved by imposition of a penalty under sub-sections (3), (4), (5) and (5A)
may, within thirty days from the date of intimation of the penalty, prefer an appeal to such officer of the
State Bank superior in rank to the officer by whom the decision appealed against was given as may be
authorized in this behalf by the Governor State Bank and any order passed by such authorised officer
after providing an opportunity of being heard shall be final.
Explanation.__ For the purpose of this section, the term ‘knowingly’ shall have the same meaning
as given under section 41D.]
3
[(6) Without prejudice to the provisions of sub-section (5), a banking company which makes
default in complying with the requirements of sub-section (1) of section 29 shall, in respect of every day
of default, pay to the State Bank on demand a penalty 1[as determined by the State Bank from time to
time in accordance with clause (a) and (b) below],—
(a) if no amount is maintained, of the minimum amount required to be maintained
under that sub-section, and
1
Subs., and ins. by Act No. XXIX of 2024, s.36.
2
Sub., by Finance Act, 2007 (Act No. IV of 2007), s.4, (w.e.f. 01-07-2007).
3
Sub-section(6)added by the Banking Companies(Amdt) Act,1968(15 of 1968), s.2(w.e.f 23.12.1968)
Page 95 of 108
(b) if any amount below such minimum is maintained, of the amount by
which the amount maintained falls short of the required minimum1[.]
1
[* * * * * * *]
2
[(7) Without prejudice to the provisions of sub-section (5), if a banking company fails or refuses
to pay or make whole or part of the amount of deposit or special deposits or penalty referred to
respectively in 3[* * *] section 13, sub-section (4) of section 25 and sub-section (6), the State Bank may,
without notice to the banking company, debit the amount of default to any account of the defaulting
banking company held with the State Bank.]
4
[(8) Without prejudice to the provisions of sub-section (5) the pecuniary fines prescribed under
this Ordinance shall be imposed and recovered by State Bank:
Provided that if a banking company fails or refuses to pay the fines or penalties imposed by State
Bank under this Ordinance, the State Bank may, without notice to the banking company, debit the
amount of default to any account of the banking company held with the State Bank.]
1
[(9) The Central Board of Directors of the State Bank may, alter or add to, the Fourth
Schedule.]
5
[83A. Dishonest removal of pledged goods.— Whoever, dishonestly removes or disposes of
any goods pledged with any banking company as security for the payment of any debt, loan, finance or
other similar facility or removes or disposes of any such goods without the prior approval in writing of
the banking company, shall be punishable with imprisonment for a term which may extend to three years,
and shall also be liable to fine which may extend to the value of the goods removed or disposed of.]
6
[84. Cognizance of offences, etc.—7[(1) No court shall take cognizance of any offence
punishable under sub-sections (1), (1A), 1[(1AA), (1B), (1C), (1D) and (2)] of section 83 except on a
complaint in writing made by an officer of the State Bank generally or specially authorised in writing in
this behalf by the State Bank and no court other than the High Court shall try any such offence.]
(2) The High Court shall have, in respect of the trial of an offence referred to in sub-section (1),
all the powers which it has in relation to a trial before it under the Code of Criminal Procedure, 1898 (Act
V of 1898), hereafter in this section referred to as the Code, and shall follow the procedure provided in
the Code for such trial except as hereinafter provided, namely:—
(a) the trial shall be without a jury and the provisions of the Code shall have effect as
if all references therein to jury or jurymen and to commitment proceedings and to
any statement or documents made or prepared in the course of such proceedings
had been omitted;
(b) section 297 of the Code shall have effect as if it required the High Court, upon the
case for the defence and the prosecutor's reply, if any being concluded, to
proceed, with all reasonable speed, to pronounce its judgment; and
(c) section 352 of the Code shall have effect as if it required the High Court, upon an
application being submitted to it by the State Bank stating that it is in the interest
of the banking companies in general or a banking company in particular that any
proceedings are not held in open court, to order that the public generally shall not
have access to, or be or remain in, the room or building used by the Court.]
1
Subs., omitted and ins. by Act No. XXIX of 2024, ss.36-37.
2
Sub-section (7) added by the Banking companies (Amdt) Act, 1972 (30 of 1972), s.17 (w.e.f 13-10-1972).
3
Omitted by Ord. 48 of 2000, s.7.
4
Added by by Finance Act, 2007 (Act No. IV of 2007), s.4, (w.e.f. 01-07-2007).
5
Ins by Act XIV of 1997, s.17.
6
Subs by the Banking Companies (Amdt) Act, 1972 (30 of 1972), s.18 (w.e.f 13-10-1972).
7
Subs by the Finance Act, 1990 (7 of 1990), s.4A, for sub-section(1)
Page 96 of 108
1
[85. Application of fines.—A Court imposing any fine under this Ordinance may direct that
the whole or any part thereof shall be applied in or towards—
(a) payment of the costs of the proceedings;
(b) the rewarding of the person on whose information the fine is recovered; or
(c) payment to a banking company of compensation for any loss caused by the
offence.]
86. Special provisions for private banking companies.—The exemptions, whether express
or implied, in favour of a private company in sections 17, 77, 83B, 86H, 91B and 91D, and sub-
section (5) of Section 144 of the 2[Companies Ordinance, 1984 (XLVII of 1984)], shall not operate
in favour of a private company which is a banking company.
87. Restriction on acceptance of deposits withdrawable by cheques.— No person other
than a banking company, the State Bank, the National Bank of Pakistan or any other banking
institution notified by the 3[Federal Government] in this behalf shall accept from the public deposits
of money withdrawable by cheque:
Provided that nothing contained in this Section shall apply to any savings bank
scheme run by the Government.
88. Change of name by a banking company.— Notwithstanding anything contained in
section 11 of the 2[Companies Ordinance, 1984 (XLVII of 1984)], the 3[Federal Government] shall
not signify its approval to the change of name of any banking company unless the State Bank
certifies in writing that it has no objection to such change.
89. Alteration of memorandum of a banking company.—Notwithstanding anything
contained in the 2[Companies Ordinance, 1984 (XLVII of 1984)], no application for the
confirmation of the alteration of the memorandum of a banking company shall be maintainable
unless the State Bank certifies that there is no objection to such alteration.
90. Certain claims for compensation barred.—No person shall have any right, whether in
contract or otherwise, to any compensation for any loss incurred by reason of the operation of any of
the provisions contained in sections 11, 15, 4[15A, 15B, 15C, 20, 25A, 5[27], 35, 41, 41A, 41B, 41C,]
42, 6[43A, 5[43AA], 43B, 43C, 43D, 43E, 43F], 47 and 58 or by reason of the compliance by a
banking company with any order or direction given to it under this Ordinance.
91. Application of certain provisions to banking company incorporated by special
enactments of the 3[Federal Legislature].— In the case of a banking company incorporated by a
10
[Federal] Act 7[or an Act of Parliament] and not liable to be wound up under the 2[companies
Ordinance, 1984 (XLVII of 1984)], the provisions of sections 11, 8[15A, 15C, 16 to 19, 21, 23 to
25B], 28 to 33, 34 [excluding sub-section (3)] , 36, 39, 40, 9[41, 41A, 41B, 41C, 41D], 42, 45, 46,
83, 84, 85, 90, 92 and 93 shall, without prejudice to the provisions of such 10[Federal] Act apply so
far as may be, to and in relation to such banking company.
1
Subs. by the Banking Companies (Amdt.) Act, 19972 (30 of 1972), s.19, (w.e.f 13-10-1972) for the originl section 85.
2
Subs. by Act IV of 2007, s. 4 (xiii) (w.e.f. 1-7-07).
3
Subs. by the Banking Companies (Amdt.) Act, 1972 (30 of 1972), s. 23, for “Central Governmant”.
4
Subs. ibid, 20 (w.e.f 13-10-1972), for “20,41”.
5
Ins. by the Finance Act, 1990 (7 of 1990), s. 4A.
6
Ins. by the Banking Companies (Amdt.) Ordinance, 1979 (56 of 1979), ss. 5 and 6.
7
Ins. by F.A.O, 1975, Art 2 & sch. (w.e.f 01-08-1975).
8
Subs. by Act 30 of 1972, s.21, for “16 to 19, 21, 23 to 25”.
9
Ins. by Act XIV of 1997, s. 18.
10
Subs. by P.o. No. 4 of 1975, by S.2. for central.
Page 97 of 108
1
[91A. Application of other laws barred.—The provisions of 2[clauses (dd), (ee) and (gg)
of section 5, section 13, 15A, 15B, 15C, 21, 24, 25, 25A, 25B, 26A], 3[27], 35, 41, 41A, 41B, 41C,
42, 4[43A, 3[43AA], 43B, 43C, 43D, 43E, 43F] and 84 shall have effect not withstanding any thing
contained in any other provision of this Ordinance except section 91, or in any other law for the time
being in force or in any contract, agreement, award, memorandum or articles of association or other
instrument.]
5
[91B. Removal of difficulties.—If any difficulty arises in giving effect to any of the
provisions of this Ordinance, the Federal Government may make such order as may appear to it to be
necessary for the purpose of removing the difficulty.]
92. Power of 6[Federal Government] to make rules.—(1) The 6[Federal Government]
may, after consultation with the State Bank, make rules to provide for all matters for which provision
is necessary or expedient for the purpose of giving effect to the provisions of this Ordinance and all
such rules shall be published in the Official Gazette.
(2) In particular, and without prejudice to the generality of the foregoing power, such rules
may provide for the details to be included in the returns required by this Ordinance and the manner in
which such returns shall be submitted and the form in which the official liquidator may file lists of
debtors to the Court having jurisdiction under Part III or Part IV and the particulars which such lists
may contain and any other matter which has to be, or may be prescribed.
(3) All rules made under this section shall be subject to the condition of previous publication,
and the date to be specified under clause (3) of Section 23 of the General Clauses Act, 1897 (X of
1897), shall not be less than six months from the date on which the draft of the proposed rules was
published :
Provided that in respect of first occasion on which rules are made under this section,
the provisions of this sub-section shall not apply.
(4) The 6[Federal Government] may, by rules made under this section, annul, alter or add to,
all or any of the provisions of the Third Schedule.
93. Power to exempt in certain cases.— The 6[Federal Government] may, on the
recommendation of the State Bank, declare, 7[by notification] in the official Gazette, that any or all
of the provisions of this Ordinance shall not apply to any banking company or to any class of
banking companies either generally or for such period as may be specified.
8
[93A. Exemption of Officers, etc., from liability.— A banking company and its officers
and employees shall be exempted from criminal or civil liability of every description provided for in
any law in respect of any property, movable or immovable, owned by the banking company,
exclusively or jointly with another person or persons so long as the property remains in the custody,
power and control of such person or persons on account of licence, lease, hire-purchase, forward
sale, rent-sharing agreement or in any other arrangement within the purview of clauses (ee) and (gg)
or section 5.
93B. Exemption from requirement of licence. Any requirement of a licence or permit to
import or expert any commodity or article or its purchase or sale shall not apply to a banking
company undertaking such transaction in the normal course of its banking business.
1
S.91A Ins by the Banking Companies (amdt) Act,1972(30 of 1972), s.22.
2
Subs by the Banking Companies(third Amdt) Ordinacne,1980 (58 of 1980), s.12.
3
Ins by the Finance Act,1990(7 of 1990), s.4A.
4
Ins by the Banking Companies (admt)Ordinacen, 1979 (56 of 1979), ss. And 6.
5
New section 91B ins. by Ord 58 of 1980, s.13.
6
Subs. by the Banking Companies (Amdt.) Act, 1972 (30 of 1972). S. 23 (w.e.f 13-10-1972), for “Central Governement”.
7
For such notifin. Sec Gaz. Of P., 1965, Ext., P.754.
8
New sections 93A, 93B, 93C, and 93D ins. by the Banking and Financial services (Amendement of Laws) Ordinance, 1984 (57 of 1984), s.2 and sch.
Page 98 of 108
Explanation.— In this section, a transaction undertaken by a banking company shall be
deemed to be in the normal course of its banking business, only if it is based on an agreement for
sale or purchase, lease, or hire-purchase of the said commodity or article by the banking company
with its customer to whom finance is provided by it and who is in possession of a valid licence or has
otherwise complied with the requirements of law governing the import or export or sale or purchase
of such commodity or article.
93C. Exchange of information.— (1) Banking companies may exchange on confidential
basis amongst themselves, either directly or through 1[any other person providing credit information
services], information about their respective clients.
(2) No suit or other legal proceeding shall lie against the 1[any credit information provider]
or any banking company or any officer of the Pakistan 1[such credit information provider] or banking
company for anything which is in good faith done in pursuance of this section or for any damage
caused or likely to be caused by anything done or intended to be done as aforesaid.
2
[93CA. Co-operation with other authorities.__ (1) Notwithstanding anything contained in
any other law for the time being in force, the State Bank may enter into any agreement or
memorandum of understanding or any reciprocal arrangement with other central banks, domestic or
foreign regulatory, supervisory or Resolution authority for the purpose of sharing and obtaining
public or non- public confidential information or cooperating and coordinating actions relevant to the
supervisory and Resolution objectives as provided in this Ordinance, subject to such measures that
the State Bank may consider appropriate to protect the confidentiality of any non-public information:
Provided that any agreement or memorandum of understanding or any reciprocal
arrangement, with any foreign regulatory, supervisory or Resolution authority shall be carried out
subject to the prior approval of the Federal Government.
(2) Subject to sub-section (1) the State Bank may, upon a request from the foreign Resolution
authority, make an order that the effects of a Resolution measure taken by a foreign Resolution
authority be fully or partially applicable to the banking company concerned:
Provided that, no such order shall be made, unless the State Bank is satisfied that__
(i) in terms of its objective and anticipated results, the foreign measure is
comparable to the exercise of Resolution powers under this Ordinance;
(ii) the relevant foreign authority’s laws allow for the recognition of State Bank
Resolution actions, if requested; and
(iii) recognizing a foreign measure would contribute to the achievement of
Resolution objectives under this Ordinance, or creditors of the bank or branch
in Pakistan would be treated equitably under the foreign Resolution
proceedings, or such recognition would have no fiscal implications in
Pakistan, or not contravene the public policy of Pakistan.]
93D. Continuance of charge and priority.— Where a charge over any property has been or
is created by any person in favour of a banking company to secure any interest-based facility
extended by the banking company to such person and such facility is at any time converted into or
substituted by any facility not based on interest, such charge shall continue to remain valid and shall
maintain its priority in favour of the banking company against all charges created by such person in
1
Sub. by Finance Act, 2007 (Act No. IV of 2007), s.4, (w.e.f. 01-07-2007).
2
Ins. by Act No. XXIX of 2024, s.38.
Page 99 of 108
favour of any other person subsequent to the original date of registration of such charge.
Explanation:— For the purposes of section 93A, 93B, 93C and 93D, “banking company”
shall have the same meaning as in the Banking Tribunals Ordinance, 1984.]
1
[94. Protection of action taken in good faith and indemnity.__ (1) No suit, prosecution or
other legal proceedings including for damages shall lie against the Federal Government, a Provincial
Government, any officer of such Government, the State Bank, Board of Directors or a member
thereof, Governor. Deputy Governors, member of any Board committee and officers and employees
of the State Bank, for any act of commission or omission done in exercise or performance of any
functions, power or duty conferred or imposed by or under this Ordinance upon such persons or any
rules and regulations made thereunder, unless such act of commission or omission is proven beyond
reasonable doubt to have been done in bad faith and with mala-fide intent.
(2) The Governor, Deputy Governors, Directors, members of any Board committee, officers
and employees of the State Bank shall not be liable in their personal capacity for any act of
commission or omission undertaken in their official capacity in good faith. In case of any such
proceedings as mentioned in sub-section (1), they shall be indemnified by the State Bank which shall
bear all the expenses thereof, unless an act or omission has been subsequently determined to have
been undertaken in bad faith and with mala-fide intent.]
95. Repeals.—(1) Omitted by the Federal Laws (Revisions and Declaration ) ordinance,
1981 (XXVII of 1981), s. 3 and Sch., II.___________
[THE FIRST SCHEDULE] Omitted by the Federal Laws (Revisions and Declaration )
ordinance, 1981 (XXVII of 1981), s. 3 and Sch., II.
___________
1
Subs. by Act No. XXIX of 2024, s.39.
THE SECOND SCHEDULE
(See section 34)
Page 100 of 108
FORM A
3. DEPOSITS AND OTHER ACCOUNTS : —— (ii) Shares (classifying into preference, ord
deferred and other classes of shares and sh
Form of Balance-Sheet
Capital and Liabilities Property and Assets
Rs. Ps. Rs. Ps.
1. CAPITAL : (a) 1. CASH :
Authorised Capital…………share of
Rs……...each……………………….. In hand with State Bank and National Bank
——
Pakistan (including foreign currency notes)
Issued Capital …………. share of
Rs……………………………each
2. BALANCES WITH OTHER BANKS
——
Subscribed Capital………………share of (showing whether on deposit or current
Rs………………….. each ………………. account):
Amount called up at Rs………… per share
……………………………………………. (i) In Pakistan .. .. .. ..
——
(ii) Outside Pakistan .. .. .. ..
Less calls un-paid .. .. .. .. 3. MONEY AT CALL AND SHORT NOTICE
Add forfeited shares .. .. .. 4.
—— INVESTMENTS (stating mode of valuati
e.g., cost or market value) : (d)
——
RESERVE FUND AND OTHER RESERVES
2. (i) Securties of the 1[Federal] and Provinc
Governments and other Trustee Securit
including Treasury Bills of the 1[Federal] a
Provincial Governments.
1
Subs. by the Banking Companies (Amdt.) Act, 1972 (30 of 1972), s. 23, for “Central”
Page 101 of 108
Savings Bank Deposits......
Current Accounts, Contingency Accounts,
etc. .. .. .. .. ..
—— ——
4. BORROWINGS FROM OTHER BANKING —— —— 5 ADVANCES : (Other than bad and dou
COMPANIES,AGENTS ETC: debts for which provision has been made
—— satisfaction of the auditors)
(i) In Pakistan .. .. .. ..
(ii) Outside Pakistan .. .. .. (I) Loans, Cash Credits, Overdrafts, etc.
Particulars :
(i) Secured (stating the nature of securities) (i) In Pakistan .. .. .. ..
(ii) Unsecured .. .. .. ..
(ii) Outside Pakistan .. .. .. ..
5. BILLS PAYABLE .. .. .. —— (II) Bills Discounted and purchased:
(excluding Treasury Bills of the
1
[Federal] and Provincial Governments) :
6. BILLS FOR COLLECTION BEING BILLS —— —— (i) Payable in Pakistan . . . .
RECEIVABLE AS PER CONTRA:
(ii) Payable outside Pakistan .. ..
(i) Payable in Pakistan .. ..
(ii) Payable outside Pakistan .. ..
1
Subs. by the Banking Companies (Amdt.) Act, 1972 (30 of 1972), s. 23, for “Central”
7. OTHER LIABILITIES : (b) —— Particulars of ADVANCES :
(i) Debts considered good in respect of
the banking company is fully secured..
8. ACCEPTANCES, ENDORSEMENTS AND —— —— (ii) Debts considered good for which the b
OTHER OBLIGATIONS PER CONTRA: company holds no other security th
debtors' personal security.
9. PROFIT AND LOSS: (iii)Debts considered good secured b
personal liabilities of one or more par
Profit as per last balance sheet.. .. .. addition to the personal security
debtors.. .. ..
Less appropriations.. .. .. .. ..
(iv)Debts considered doubtful or bad
Add profit for the year brought from the Profit —— —— provided for .. .. .. .. . .
& Loss Account .. ... .. ..
10. CONTINGENT LIABILITIES : (c) (v) Debts due by directors or officers
banking company or any of them
severally or jointly with any other perso
(vi) Debts due by companies or firms in
the directors of the banking compa
interested as directors, partners or ma
agents or in the case of private compan
members.
Page 102 of 108
(vii)Maximum total amount of adv
including temporary advances made
time during the year to directors or ma
or officers of the banking company or
them either severally or jointly with an
persons :(e)
(viii)Maximum total amount of adv
including temporary advances granted
the year to the companies or firms in,
the directors of the banking compa
interested as directors, partners or ma
agents or, in the case of private compan
members : (e)
(ix) Due from banking companies ..
6. BILLS RECEIVABLE BEING BILLS
COLLECTION AS PER CONTRA:
(I) Payable in Pakistan .. .. ..
(ii) Payable outside Pakistan .. .. ..
7. CONSTITUENTS' LIABILITIES
ACCEPTANCES, ENDORSEMENTS
OTHER OBLIGATIONS PER CONTRA
8. PREMISES LESS DEPRECIATION : (f)
9. FURNITURE AND FIXTURES
DEPRECIATION : (f)
10. OTHER ASSETS, INCLUDING SILVER
specified) : (g) .. .. .. . .. .. .. .. .. .. . .. .. .
11. NONBANKING ASSETS ACQUIRED
SATISFACTION OF CLAIMS (stating
of valuation) : (h) .. .. .. .. .. .. . .. .. .. .. .
12. PROFIT AND LOSS .. .. .. . .. .. .. .. .. .. . .. .
_____
Total ..
_____
NOTES
(a) capital.—(i) the various classes of capital, if any, should be distinguished.
Page 103 of 108
(ii) Shares issued as fully paid-up pursuant to any contract without payments being received
in cash should be stated separately.
(iii) Where circumstances permit, issued and subscribed capital and amount called up may be
shown, as one item, e.g., Issued and Subscribed Capital ……………………………....….. Shares of
Rs. ……………..……………… paid-up.
(iv) In the case of banking companies incorporated outside Pakistan the amount of deposit
kept with the State Bank of Pakistan under subsection (3) of sec tion 13 of the Banking Companies
Ordinance, 1962, should be shown under this head; the amount, however, should not be extended to
the outer column.
(b) Under this heading may be included such items as the following: pension or insurance
funds, unclaimed dividends, advance payments and unexpired dis counts, liabilities to subsidiary
companies and any other liabilities.
(c) These should be classified under the following categories :—
(i) Claims against the banking company not acknowledged as debts.
(ii) Money for which the banking company is contingently liable showing
separately the amount of any guarantee given by the banking company on
behalf of directors or officers.
(iii) Arrears of cumulative preference dividends.
(iv) Liability on Bills of Exchange rediscounted.
(v) Liability on account of outstanding Forward Exchange Contracts.
(d) Where the value of the investments shown in the outer column of the balance sheet is
higher than the market value, the market value shall be shown separate ly in brackets.
(e) Maximum total outstanding balance in all such accounts as a unit on any day during the
year should be given under this heading.
(f) Premises wholly or partially occupied by the banking company for the purposes of
business should be shown against "Premises less depreciation". In the case of fixed capital
expenditure, the original cost, and additions thereto and deductions therefrom during the year should
be stated, as also the total depreciation written off. Where sums have been written off on a reduction
of capital or revaluation of assets, every balance sheet after the first balance sheet subsequent to the
reduction or revaluation should show the reduced figures with the date and amount of the reduction
made. Furniture, fixtures and other assets which have been completely written off need not be shown
in the balance sheet.
(g) Under this heading may be included such items as the following, which must be shown
under headings suitably described; preliminary, formation and organ isation expenses, development
expenditure, commission and brokerage on shares, interest accrued on investments but not collected,
investments in shares of subsidiary companies and any other assets.
Page 104 of 108
(h) Value shown shall not exceed the market value and in cases where the market value is not
ascertainable, the estimated realisable value.
General Instructions.—The corresponding figures (to the nearest rupee, if so desired) for the
year, immediately preceding the year to which the profit and loss account relates should be shown
in separate columns.
Page 105 of 108
FORM B
FORM OF PROFIT AND LOSS ACCOUNT
Profit and Loss Account for the year ended December,
INCOME* (LESS PROVISIONS MADE DURING THE YEAR FOR BAD & DOUBTFUL
DEBTS AND OTHER USUAL OR NECESSARY PROVISIONS)
Expenditure
1
[1. Rs. Ps. Rs. Ps.
Interest on deposits, borrowing etc. and or 2[1. Interest and Discount and or Return *] .. .. .. .. ..
*Return].
2. Salaries and Allowances and provident 2. Commission, Exchange and Brokerage .. .. .. .. ..
Fund (showing separately salaries and
allowances to managing director, manager
or chief executive officer) .. .. .. ..
3. Directors' and Local Committee Members' fees and 3. Rents .. .. .. .. .. .. .. .. ..
allowances .. .. .. .. ..
4. Rent, Taxes, Insurance, Lighting, etc. .. .. .. .. 4. Net profit on sale of investments, gold and silver, land,
premises and other assets (not credited to Reserves or any
particular Fund or Account) . .
5. Law Charges .. .. .. .. .. .. .. .. .. .. 5. Net profit on revaluation of investments, gold and silver, land,
premises and other assets (not credited to Reserves or any
particular Fund or Account) .. .. .. .. .. ..
6. Postage, Telegrams and Stamps .. .. .. .. .. .. 6. Income from nonbanking assets, and profit from sale of or
dealing with such assets .. ..
7. Auditors' Fees .. .. .. .. .. .. 7. Other receipts .. .. .. .. .. .. .. ..
8. Depreciation on and repairs to the banking company’s 8. Loss (if any) .. .. .. .. .. .. .. .. ..
Property .. .. .. .. .. .. .. .. ..
9. Stationery, Printing, Advertisement, etc, .. .. .. ..
10. Loss from sale of or dealing with nonbanking assets .. .. ..
11. Other Expenditure .. .. .. .. .. .. .. ..
12 Balance of Profit .. .. .. .. .. .. ..
______ ______
Total . . ______ Total . . ______
* Net loss on sale or revaluation of investments, gold and silver, land premises and other assets, if any, may be deducted from income.
* 'Return' means income from, or as case may be, paid on, noninterest bearing accounts.
1
Subs. by the Notifin. No. BCD. 2/81, dt. 13-12-1981,for "1. Interest paid on deposits, borrowings etc.”, See Gaz. of P.. Ext., Pt.I11, dt. 19-12-1981, P.446.
2
Subs. ibid., for “1. Interest and Discount”.
Page 106 of 108
THE THIRD SCHEDULE
[See section 63(2)]
List of Debtors
1. The official liquidator shall, from time to time, submit lists of debtors to the High Court,
each list being verified by an affi davit.
2. Every such list shall contain the following particulars :—
(a) names and addresses of the debtors ;
(b) amount of debt due to the banking company by each debtor;
(c) rate of interest, if any, and the date up to which such interest has been
calculated in the case of each debtor;
(d) description of papers, writings and documents, if any, relating to each debt;
(e) relief or relief's claimed against each debtor.
3.—(a) In every such list, the official liquidator shall distiguish between the debts for which
the banking company holds any security other than a personal security and the debts for which no
security or only a personal security is given ;
(b) In the case of secured debts, particulars of the securities claimed by the banking company,
and whenever possible their estimated value, and the names and addresses of person or persons, if
any, having an interest in the securities or the right of redemption therein ;
(c) In case the debt is guaranteed by any person or persons, the name and address of the
guarantor or guarantors with particulars as to the extent to which the debt is guaranteed and
description of documents, papers or writings, in support of such guarantee.
4. If the debtor is adjudged insolvent either before or after he has been included in any such
list, but before such list is settled, the name and address of the assignee or the receiver of his estate,
as the case may be, should be stated in, or added to the list.
5. If the original debtor dies either before or after he has been included in any such list, but
before such list is settled, there shall be substituted in his place the names and addresses of legal
representatives as far as the official liquidator is able to ascertain.
___________________
Page 107 of 108
1THE FOURTH SCHEDULE
THE BANKING COMPANIES ORDINANCE, 1962
[See Section 25(3),831
Section Limit of Penalty Per day during which the default
continues
25(3) Upto Rs. 200,000/- Upto Rs. 10,000
83(1) Upto Rs. 5,000,000/- -
83(1A) Upto Rs. 100,000,000/- -
83(1C) Upto Rs. 50,000,000/- Upto Rs. 100,000
83(2) - Upto Rs. 1,000,000
83(3) Upto Rs. 2,000,000/- Upto Rs. 100,000
83(5) Upto Rs. 2,000,000/- Upto Rs. 1,00,000
83(5A) For individual Upto Upto Rs. 1,000,000
Rs. 20,000,000/-
For financial institution Upto Rs. Upto Rs. 1,000,000]
20,000,000/- or Upto 0.5% of
total assets of such institution
whichever is higher
________
Uploading Date: 10-12-2024
1
Added by Act No. XXIX of 2024, s.40.
Page 108 of 108
Source: Pakistan Code, Ministry of Law and Justice (pakistancode.gov.pk). Text on this page is reproduced verbatim from the official PDF and is provided for reference only. For the authoritative version, always consult the source document or a current reported edition.
LexForm advocates handle matters under Banking Companies Ordinance across Pakistan, the UK, the EU, and the US.